Bubs Australia Announces Strategic Review Outcomes to Drive Growth and Enhance Shareholder Value

Melbourne, 6 July 2023 - Bubs Australia Limited (ASX:BUB) has revealed the findings of its Strategic Review, outlining a comprehensive plan to fuel growth and deliver increased shareholder value. With a strong focus on the USA, China, and Australia operations, the company aims to capitalize on its competitive advantages and optimize its product portfolio.

USA Growth Engine:

• Expansion into major retailers, including Grocery & Pharmacy, to increase sales velocity
• Continued growth through E-Commerce platforms
• Secure FDA permanent access to the US market

China Reset:

• Multi-channel go-to-market strategy with new leadership and trade partners
• Focus on goat infant milk formula (IMF) and goat adult milk powder, areas of clear competitive advantage

Portfolio Optimisation:

• Emphasize premiumisation and repositioning of bovine IMF products
• Product rationalisation, innovation, and investment in core brands

Sweating Existing Assets:

• Boost utilization of the Deloraine manufacturing facility in Victoria
• Explore opportunities such as State Administration for Market Regulation (SAMR) registration for China, toll manufacturing, and selective private label agreements

Working Capital:

• Reduction of annual operating expenses by approximately $10m
• Expected halving of monthly cash burn from $5m to $2m in Q2 FY24
• Liquidation of excess inventory while maintaining marketing investment at 15% of net sales

Bubs Chair, Ms. Katrina Rathie, expressed confidence in the company's new governance structure and operational teams, highlighting the importance of identified strategic partners to execute the plan successfully.

Looking ahead to FY24, Bubs Australia aims to achieve several key objectives:

• Net sales revenue of $80m, a 35% increase from the previous year
• Gross profit margin of 40%
• Continued progress with FDA
• Renewed focus on infant and adult goat nutrition
• Working capital improvements
• Enhanced transparency and governance
• Expected cash flow positivity in FY25

The last recorded price for Bubs Australia Limited (BUB) is $0.230, reflecting a positive change of $0.005 or 2.222%.

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