Bubs Australia soars after swinging to profitability in half-year earnings

Bubs Australia

22/01/2025 24:08

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      HY EBITDA A$2.9 mln
    

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      Qtrly U.S. gross rev rises 26%
    

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      Shares hit 6-week high
    

  
    By John Biju
       Jan 22 (Reuters) - Shares of infant formula maker Bubs
Australia  BUB.AX  surged on Wednesday after the company
reported a return to profitability in the first half of fiscal
2025, driven by strong growth in its key markets, the United
States and China.
    Shares of the company rose as much as 22.5% to A$0.12 in
early trade, marking what could be their strongest session since
June 2023, and touched a six-week high. The broader benchmark
index  .AXJO  was up 0.3%.
    Bubs Australia posted earnings before interest, tax,
depreciation, and amortization (EBITDA) of A$2.9 million ($1.82
million) for the six months ended Dec. 31, recovering from an
EBITDA loss of A$6.8 million in the year-ago period.
    The half-year earnings surpass company's target of EBITDA
breakeven in fiscal 2025, Bubs said in a statement.
    Sales in the United States were supported by new packaging
for products introduced in the fourth quarter of fiscal 2024,
which offered a lower price point to consumers.
    The new packaging format, which has a higher margin than the
old packaging, supported a strong group gross margin of 48% in
the first half of the fiscal 2025, while a stronger dollar also
offered further support, the company said. 
    Gross revenue from the United States for the second quarter
rose 26% to A$17.2 million, while that from China soared 68% to
A$7.1 million.
    Growth in China was supported by further distribution of
company's products in mother and baby stores. Bubs now has
distribution in 20 provinces and 61 cities across China.
    "The demand for quality organic infant baby food is now at
the forefront in the market. Bubs Australia now has such a
strong brand in key markets (China & US). I believe that their
current successful results will continue in 2025," said Brad
Smoling, managing director at Smoling Stockbroking.

        ($1 = 1.5949 Australian dollars)

 (Reporting by John Biju in Bengaluru; Editing by Mohammed Safi
Shamsi)
 ((John.Biju@thomsonreuters.com;))