Bubs settles court action

Bubs Australia has settled Federal Court proceedings with its former chief executive and founder Kristy Carr.

The company also told investors that its China reset was under way and it expected sales to increase in the coming half.

Ms Carr and former executive chairman Dennis Lin launched legal action last year against Bubs and its nonexecutive directors – Katrina Rathie, Steve Lin, Paul Jensen and Reg Weine – in the Federal Court over their removal, alleging that the company breached Fair Work rules.

Bubs later launched a countersuit claiming the pair misused company funds on luxury travel and fashion.

The baby formula group told shareholders on Monday that proceedings had ended “on confidential terms with no orders as to costs”.

Bubs also resolved all outstanding matters with respect to its Chinese Joint Venture with Zhitong (Hangzhou) Health Technology, which had been established to distribute the company’s Chinese label goat infant formula products.

Both conclusions come as Bubs reported a smaller loss of $7.7m in the six months to December, compared to $44.4m in the previous corresponding period after revenue increased 25 per cent to $39.4m.

Bubs chief executive Reg Weine said the company’s China reset was well under way after revenue from the world’s second biggest economy slumped 30 per cent to $7.1m, compared to a bounce of 84.6 per cent in the US and 36.8 per cent in Australia.

“We expect sales in the second half to exceed the first half, delivering mid-single digit revenue growth over fiscal year 2023 for the full year,” he said. “While the inventory overhang in China under Bubs’ previous exclusive distributor continues to be heavily discounted in all channels, this inventory will be cleared by the end of the financial year.”

Mr Weine said that the US market remained its main priority after its capital raising in November allowed the group to commence a second production shift at its Deloraine manufacturing facility.