Bubs Australia (ASX: $BUB) reports strong financial performance in 1HFY24

Bubs Australia Limited (ASX: $BUB) has reported a 30% increase in gross revenue to $49.2 million and a 25% increase in revenue to $39.4 million for the first half of the financial year 2024. The company achieved significant growth in the USA and Australian markets, with the USA representing 46% of the Group's net revenue. Bubs continues to make progress in meeting regulatory milestones for permanent access to the U.S. market and is focused on diversifying America's infant formula supply chain. In Australia, Bubs has emerged as the fastest growing infant formula manufacturer within the top six major manufacturers, with a 10% growth in scan sales value and a doubling of the infant formula category growth rate. However, the Group's performance in China was down 30% compared to the same period last year due to a re-set strategy and inventory overhang from the previous exclusive distributor. The Group's gross margin for the half-year stood at 49%, reflecting its premium brand and market positioning, improved inventory management, and geographic and channel optimization. Operating expenses to revenue ratio decreased to 66% from 72% in 1HFY23, providing a pathway to profitability in FY25.

Executive Commentary on Financial Performance and Outlook

The Group's financial performance in the first half of FY24 reflects our strategic focus on expanding in the USA and Australian markets. We are pleased with the revenue growth and the progress made in meeting regulatory milestones for permanent access to the U.S. market. Our efforts to diversify America's infant formula supply chain and secure ongoing product availability are yielding positive results. In Australia, our strong performance has positioned us as the fastest growing infant formula manufacturer within the top six major manufacturers. While we faced challenges in China, our re-set strategy and upcoming new product development and innovation are expected to drive growth in the region. The improvement in our gross margin and the decrease in operating expenses to revenue ratio demonstrate our commitment to cost control and profitability. We are optimistic about the outlook and remain focused on achieving our strategic goals and delivering sustainable growth in the future.

Summary of 1HFY24 Performance and Future Outlook

Bubs Australia Limited (ASX: $BUB) has reported a strong financial performance in the first half of FY24, with a 30% increase in gross revenue and a 25% increase in revenue. The company's strategic focus on expanding in the USA and Australian markets has driven significant growth, with the USA representing 46% of the Group's net revenue. Despite challenges in China, the Group is optimistic about the future, with a strong pipeline of new product development and innovation expected to drive growth in the region. The improvement in gross margin and the decrease in operating expenses to revenue ratio reflect the company's commitment to cost control and profitability. Bubs Australia remains focused on achieving its strategic goals and delivering sustainable growth in the future.