Nuchev’s First Positive Cashflow Quarter Signals Growth but Market Challenges Loom

Nuchev Achieves Positive Cashflow Milestone

In a significant financial milestone, Nuchev Limited (ASX: NUC) has reported its maiden positive operating cashflow quarter, generating $0.2 million in Q2 FY25. This achievement underscores the company’s growing sales momentum and operational efficiencies following the integration of its recent acquisition, bWellness.

The positive cashflow reflects a combination of factors including increased customer receipts, disciplined inventory management, and controlled selling, general, and administrative expenses (SG&A). Nuchev’s cash balance rose to $5.0 million by the end of December 2024, up $0.3 million from the previous quarter, providing a stronger liquidity position to support ongoing growth initiatives.

Robust Revenue Growth Driven by Acquisition and Market Expansion

For the first half of FY25, Nuchev posted group revenue of $11.3 million, marking a 65% increase compared to the prior corresponding period. This growth was largely fueled by the acquisition of bWellness, which contributed $5.1 million in sales during H1 FY25, and strong performances in both the Australian and New Zealand (ANZ) retail channels and China’s cross-border e-commerce (CBEC) market.

Quarter-on-quarter, group revenue rose 21% to $6.2 million in Q2 FY25, nearly doubling compared to the same quarter last year. The bWellness acquisition has notably diversified Nuchev’s distribution channels, particularly into the ANZ practitioner segment, enhancing the company’s market reach and sales resilience.

Oli6® Brand Continues to Outperform Market

The Oli6® nutritional product line remains a key growth driver, with sales in ANZ and China CBEC increasing 45% quarter-on-quarter to $3.7 million. In the ANZ retail market, Oli6® sales grew 39% year-on-year and 30% quarter-on-quarter, supported by strategic partnerships with major retailers such as Coles, Woolworths, and Chemist Warehouse.

Oli6® also outpaced the broader infant formula category, with a 20% moving annual total (MAT) sales growth compared to just 1% for the overall market. The brand’s strong consumer recognition is further evidenced by its fifth consecutive year as the "Number 1 Toddler Drink" on ProductReview.com.au.

New Product Development and Market Opportunities

Nuchev’s new product development (NPD) pipeline is gaining traction, highlighted by the October launch of Oli6® Grow, timed to capitalize on China’s Double 11 sales event. The product recorded $0.3 million in sales during Q2 FY25 and is expected to contribute to margin improvement and portfolio expansion in the second half of FY25.

China CBEC sales of Oli6® Nutritionals surged 62% quarter-on-quarter to $2.0 million, with Double 11 sellout volumes up 115% year-on-year. This underscores the importance of the Chinese market and the effectiveness of Nuchev’s distribution agreements and seasonal sales strategies.

Operational Efficiencies and Working Capital Management

Alongside revenue growth, Nuchev has focused on optimizing inventory levels, reducing net inventory holdings by 12.5% during the quarter. This reduction aligns stock with forecast sales and has delivered working capital benefits, including lower warehousing and logistics costs.

Inventory for Oli6® Nutritionals is down 44% over the past year, while bWellness inventories have decreased 29% since acquisition. These improvements reflect disciplined supply chain management and contribute to the company’s positive cashflow and financial health.

Looking Ahead

CEO Mick Myers highlighted the company’s strong H1 FY25 performance as a foundation for future growth. With the bWellness integration complete and a robust NPD pipeline, Nuchev is well positioned to continue expanding its nutritional and wellness product offerings across key markets.

While the company remains focused on achieving breakeven profitability, the combination of strategic acquisitions, product innovation, and operational discipline sets a promising trajectory for the remainder of FY25.