The Bubs Australia Ltd (ASX: BUB) share price will be on watch this morning following the release of its full year results after the market close on Friday.
How did Bubs perform in FY 2019?
In FY 2019 Bubs delivered a 154% increase in sales to $46.8 million and a 300% jump in gross profit to $9.2 million. The latter was achieved thanks to a 7-percentage point increase in its gross margin to 21%.
Normalised EBITDA came in at -$5.9 million and the company reported a statutory net loss of $35.5 million for the 12 months. This included a one-off $20.4 million non-cash expense for equity linked to the Chemist Warehouse partnership and a series of one-offs.
Bubs finished the period with a cash balance of $23.3 million which, combined with its cashflow forecast, management believes will be sufficient to meet all operational requirements for FY 2020.
What were the drivers of this growth?
The company's infant formula products were key to its impressive growth in FY 2019.
Infant formula sales grew 278% on the prior corresponding period and now represent 43% of net revenue. This was driven largely by daigou shoppers which are buying Bubs products and those of A2 Milk Company Ltd (ASX: A2M) and Bellamy's Australia Ltd (ASX: BAL) and then sending them over to China.
This was supported by a 133% lift in adult milk powder sales to $15.6 million and a 59% jump in the sales of its organic baby food.
Bubs founder and chief executive officer, Kristy Carr, commented: "Throughout the year we have continued to focus on pursuing our four pillar growth strategy together with our investments in supply chain and capabilities, investment in building Bubs brand, and the formation of new key channel partnerships. This strategic focus has helped deliver exceptional growth across all sales channels covering the various routes-to-market for Australian and Chinese consumers, and resulted in record sales growth for the year with total net revenue increasing 160% on prior year."
Looking ahead, Mrs Carr believes the company's Australia Deloraine Dairy acquisition, its joint venture with Beingmate in China, and its strategic alliance with Chemist Warehouse have positioned the company perfectly for sustainable growth.
She added: "We are confident these key strategic partnerships, combined with underlying investments in supply chain capabilities and product innovation, will deliver strong scalable growth, establishing a solid platform for achieving overall profitability in FY20."
