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Bubs share price lower following AGM update

James Mickleboro
baby, milk, formula, bellamy's, bubs

The Bubs Australia Ltd (ASX: BUB) share price has tumbled lower following the release of its annual general meeting presentation.

In afternoon trade the infant formula company’s shares are down 2% to $1.07.

What was in the AGM presentation?

Management reminded shareholders of how the company performed during FY 2019.

During FY 2019 Bubs almost tripled its gross revenue to $46.8 million. Net sales also grew quickly to $43.9 million.

This strong growth was driven by a 153% increase in Domestic sales to $35.7 million and a 209% lift in Direct to China export net sales to $7.9 million.

In respect to its Domestic sales, Bubs’ increased availability in Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) stores and its deeper penetration in the pharmacy channel supported its sales. As did its active engagement with the Australian-based and highly productive corporate Daigou Channel.

The increase in Direct to China export net sales was the result of expanded marketing activity and sales platform contract wins. This was supported by the distribution of Bubs Organic Chinese label baby food products in mother and baby stores throughout China. This includes the market leading Kidswant chain.

What about FY 2020?

No trading updates or guidance were provided at the event.

However, management appears confident on the future. It said: “We are well placed to pursue our strategic goals towards delivering profitable and scalable sustainable growth.”

Management also dismissed any concerns over China’s declining birth rates and increasing competition.

Executive Chairman Dennis Lin said: “It has been well documented that the birth rate in China is declining, and we face increasing competition in our category of specialty ultra-premium infant nutrition. However, with our underlying influence on the supply chain, our proud Australian heritage and brand integrity, we remain confident of delivering our strategic objectives, and in the process deliver returns for shareholders.”

The chairman also revealed that the company is looking into following the lead of A2 Milk Company Ltd (ASX: A2M) by increasing its marketing investment.

He concluded: “As we continue to scale the business taking into account market factors, we will continue to explore ways to deliver growth and stay ahead of the competition. To that end, we are exploring the need to accelerate some of our investments in marketing and also new product pipelines so that we are able to take advantage of the opportunities that are ahead of us.”

The post Bubs share price lower following AGM update appeared first on Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended BUBS AUST FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019