- Bubs Australia (BUB) recaps its 2021 financial year which it describes as being “undeniably tough”
- Bubs’ revenue decreased by 28 per cent to $39.3 million and it saw a significant loss after tax of $74.7 million compared to a $7.7 million loss in FY20
- The infant formula manufacturer increased expenditure in all areas except marketing costs, and noted a hefty $44.6 million impairment charge
- While demand in the Daigou channel suffered, Bubs remains the fastest growing infant formula producer across Woolworths, Coles and Chemist Warehouse
- At the end of the period, Bubs had $27.9 million in cash which it says is sufficient enough to execute its growth strategy in FY22
- Company shares are down 4.76 per cent to trade at 40 cents
Bubs Australia (BUB) has released a report for the 2021 financial year which the company described as being “undeniably tough”.
The infant formula manufacturer posted a 28 per cent decrease in revenue from $54.6 million in FY20 to $39.3 million in FY21.
Group gross margin also decreased from a $10.4 million profit in FY20 to a $7.3 million loss in FY21. The company attributed this to a $12.6 million inventory write-off and the decision to sell excess bulk powders at a loss due to softened demand driven by COVID-19.
On a statutory basis, Bubs reported a $74.7 million loss after tax compared to a $7.7 million loss in the prior corresponding period.
Furthermore, the company noted an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) loss of $28.5 million compared to a $11.3 million EBITDA loss in FY20.
Aside from marketing costs, which decreased by about 28 per cent, the company increased employee costs by 8 per cent to cover new resources. Admin costs also increased by just shy of $2 million which Bubs said was mainly due to bad debts, increased product development costs, IP protection and donations.
Another major contributor to increased spending was an impairment charge of $44.6 million which was partially a result of the sharp declining demand in the Daigou channel.
CEO and founder Kristy Carr commented on the annual results.
“There is no doubt that the disruptions caused by COVID-19 significantly impacted our performance, with international border closures triggering a severe demand shock and sharp decline in revenues in the first quarter, followed by subdued Daigou sales throughout the remaining three quarters,” Ms Carr said.
“As we pivoted to new ways of doing business, resetting our supply chain, and working closely with our key domestic and international trading partners, our agility and resilience have underpinned our momentum toward a rebuild phase.”
Positively however, Bubs added over 1300 distribution points for its products. Woolworths continued to carry its range of eight products across 700 stores. Its organic grass-fed formula can now be found in 720 Coles stores while the goat formula increased to cover 760 stores. Additionally, all 40 of its products can be found in Chemist Warehouse.
Significantly, Bubs Infant Formula more than doubled in domestic share throughout the year with a combined retail scan sales growth of 51.5 per cent across Woolworths, Coles and Chemist Warehouse.
At the end of June 2021, Bubs had $27.9 million in cash which it said would be sufficient enough to execute its growth strategy in FY22.
Executive Chairman Dennis Lin said the pandemic gave the company a better understanding of what products are in demand.
“While the year was undeniably tough, necessitating difficult decisions, we believe that we have emerged stronger for it.”
Company shares were down 4.76 per cent to trade at 40 cents at 11:17 am AEST.