Bubs Australia, the infant-formula and baby-food maker, has settled its dispute with founder and former CEO Kristy Carr and former chairman Dennis Lin.
Without revealing details of the terms of the settlement, Bubs today (26 February) confirmed agreement between the parties had been reached.
In commentary alongside the company’s half-year results, it said: “Bubs is pleased to have settled the proceedings in the Federal Court of Australia with Ms Kristy-Lee Newland Carr and Mr Dennis Lin. The claim commenced by Ms Carr and Mr Lin against Bubs, Katrina Rathie, Steve Lin, Paul Jensen and Reg Weine and the cross-claim commenced by Bubs against Ms Carr and Mr Dennis Lin have been (mutually) discontinued on confidential terms with no orders as to costs.”
The dispute became public in May last year when the publicly-listed business announced the departure of CEO Carr – who founded the business in 2005 – in a stock-exchange filing, a fortnight after instigating a strategic review.
In February 2023, Bubs had reported a statutory EBITDA loss of A$42m (then $27.7m) for the six months to 31 December, compared to a A$1.2m profit a year earlier.
When it announced its strategic review, the baby-food business revealed its gross revenue in the third quarter of its 2023 financial year fell by 10%.
Bubs claimed Carr was to be axed for failing to comply with “reasonable board directions”. It said at the time the non-executive directors had decided to make a leadership change and alter the “governance framework of the company to ensure that it aligns with ASX [Australian Securities Exchange] Corporate Governance Principles and best practice”.
Carr’s departure followed hot on the heels of that of executive chairman Dennis Lin, who had been working with the Victoria-based company’s board for a transition period.
In July, an attempt by Carr and Lin, alongside another departee, CFO Iris Ren, to wrestle back control of the board was defeated.
Rathie took up the role of chair after Lin’s departure while COO Richard Paine became interim CEO, a position he stayed in until August when former non-executive director and board member Weine was appointed as the new chief executive.
Bubs’ latest set of results make for better reading. In the six months to 31 December 2023, revenue of A$39.4m was 25% up year-on-year while the company’s net loss narrowed from A$44.4m to A$7.7m.
Its statutory EBITDA loss also narrowed, from A$42m 12 months earlier to A$6.7m.
Bubs is seeking permanent access to the US market from the FDA (Food and Drug Administration) and is undergoing clinical trials there. It is already shipping products to America and said it is experiencing “strong demand”. Net revenue from the US was up 84.6% year-on-year to A$18.2m.
But the company continues to struggle in China where it has had distribution problems. Its net revenue from the country of A$7.1m was down 30.3% on the same period 12 months earlier.
However, CEO Weine said: “Our China reset is well underway and we expect sales in H2 to exceed H1, delivering mid-single digit revenue growth over FY23 for the full year. 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 FY24.”
Weine said that “USA market expansion remains our number one priority”.
He also confirmed that interim CFO Robin Johnston has now been given the role permanently.
