Bubs Australia falls after mounting new strategy, outlook amid board overhaul
By Rishav Chatterjee
(Reuters) -Shares of Bubs Australia pared most of their early losses on Thursday after opening about 9% lower, as the embattled baby formula maker launched a five-point plan to reduce operating expenses and cash burn.
Bubs has been focussing on streamlining its businesses locally, in China and the West and said it expected monthly cash burn to fall to A$2 million ($1.33 million) by the second quarter of 2024 from A$5 million at present.
Shares were down 2.2% to A$0.22 as of 01:13 GMT after dropping as much as 8.9% earlier.
Tony Sycamore, market analyst at IG Australia, said the initial reaction to dump Bub's stock was a «little surprising».
«The new plan has potential to stop rot in shareholder value, given its focus on cutting operating expenses and reducing cash burn. However, the devil is in the detail and how well Bubs can deliver,» he added.
As part of the latest strategy, Bubs has revamped its distressed China operations with new leadership and is assessing State Administration for Market Regulation registration for China for its products.
While Bubs' minority shareholders, controlling 5.04%, are currently seeking to remove all the four non-executive directors at an extraordinary general meeting, the company said it would work on improving transparency and governance.
The minority shareholders has nominated former a2 Milk Asia head Peter Nathan to be the new CEO.
In May, Bubs removed ex-CEO and founder Kristy Carr during a dispute with largest shareholder, Alibaba-backed private equity firm C2.
«The Board is confident that we now have the right governance structure and operational teams to deliver strong and profitable growth,» said Chair Katrina Rathie, who is seeking to hold her position
Read more on investing.com
