Bubs (ASX:BUB) share price on watch after company’s quarterly update

The company’s cash position decreased by $8.5 million in the quarter

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The Bubs Australia Ltd (ASX: BUB) share price will be one to watch when trading resumes this morning. That’s after the company released a trading update for the June quarter.

At market close yesterday, shares in the dairy producer were trading for 46 cents – up 4.55%.

Let’s take a closer look at today’s news.

Why the Bubs share price will be one to watch

In a statement to the ASX, Bubs Australia gave an update on its cash position and activities during the last quarter. Overall, the company experienced a cash outflow of approximately $8.5 million for a total cash position of $27.8 million.

The main contributor to this position was a $3.4 million loss in operating activities and a $5 million investment in the business.

Despite operations producing a net outflow, revenue for the quarter was up 8% on the previous quarter to $12.8 million. It was down 4% on the prior corresponding period (pcp), however. Customer receipts for the quarter was $9 million. Total revenue for FY21 was $46.8 million – a 24% downturn on the pcp.

There are also signs the Chinese market is picking up again. Sales to this customer base were heavily disrupted by the impacts of COVID-19. However, e-commerce sales to China are up 10% on the pcp, including a 15% uptick for infant formula specifically.

Sales to the corporate daigou channel (CDC) are up 166% across the group. Infant formula sales to the CDC are 17 times higher on the pcp.

Total international sales are up 224% on the pcp and 48% on the previous quarter. Bubs Australia previously announced it was moving into the US market. The Bubs share price rocketed 17% on the day of that announcement.

Management commentary

Bubs Australia CEO Kristy Carr said:

Bubs Australia continues to make solid progress on its COVID-19 recovery journey despite what has been a difficult year, reflecting our agility in responding to dynamic market conditions and the strength of our brand promise, delivering increased half-on-half revenue growth, as foreshadowed at our interim results.

The company closed the fiscal year comfortably with continued quarter-on-quarter growth momentum. Domestic sales increased 9 per cent on prior quarter and further market share increases were achieved.

It should be noted while domestic sales were 9% higher on the previous quarter, they were also down 29% on the pcp.

Bubs share price snapshot

Over the past 12 months, the Bubs share price has plummeted 49.5%. The S&P/ASX 200 Index (ASX: XJO) is up 23.4% over the same time. Year-to-date, Bubs shares are down about 23%.

Bubs Australia has a market capitalisation of around $282 million.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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