Tuesday, July 23, 2024

Oatly Group AB reports 3Q revenue of $187.6M, up 2.5% on year

MALMÖ, Sweden – Oatly Group AB (Nasdaq: OTLY), the world’s original and largest oat drink company, today announced financial results for the third quarter and nine months ended September 30, 2023. Third Quarter 2023 Highlights include revenue of $187.6 million, a 2.5% increase compared to the prior year period; on a constant currency basis, revenue was flat.

  • Gross margin in the quarter was 17.4%, an increase of 1470 basis points compared to the prior year period and a decrease of 180 basis points compared to the second quarter of 2023. The Company estimates that it incurred approximately $6 million of incremental cost of goods sold related to the Asia strategy reset; these reset costs reduced gross margin by approximately 320 basis points.
  • Net income attributable to shareholders of the parent was $44.0 million compared to net loss of $107.9 million in the prior year period.
  • EBITDA loss was $54.8 million in the quarter; Adjusted EBITDA loss was $36.0 million, which is an improvement of $46.7 million compared to the prior year period.
  • Following certain events after the end of the reporting period, the Oatly Group AB decided to discontinue the construction of its new production facilities in the EMEA and Americas segments. In the fourth quarter of 2023, the Company expects to incur non-cash impairment charges in the range of $110 to $150 million. The Company also expects to incur restructuring and other exit costs of approximately $40 to $50 million relating to these production facilities. The Company currently estimates these restructuring and other exit costs to result in no more than $20 million of net cash outflows over the next two fiscal years, after taking into consideration anticipated proceeds from selling certain equipment. The decision is expected to increase operational focus, reduce complexity, and reduce the Company’s capital expenditure requirements, all of which increases management’s confidence in the Company’s longer-term margin targets.
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Jean-Christophe Flatin, Oatly ’s CEO, commented, “I am pleased with the progress that we made in the third quarter. Our profitability exceeded our internal expectations and improved sequentially in each segment. We are clearly starting to see the positive impacts of the bold actions that we have been taking over the past year, and we remain on track to achieve profitable growth in 2024.”

Flatin continued, “As we move forward, we are doubling down on our asset-light production strategy. After a detailed review of our supply chain networks in EMEA and Americas, we have found ways to service the growing demand by expanding capacity at our existing facilities in a more gradual manner.

As such, we have decided to discontinue construction on the third production facility in each of the two segments. We believe that this change in our approach will increase our focus by reducing the complexity of the supply chain, which increases our confidence in our longer-term margin targets.

We also now expect to have lower capital expenditure requirements, and we expect to spend below $75 million in capital expenditures in each of 2023 and 2024.”

Flatin concluded, “We are also adjusting our 2023 outlook to reflect an acceleration of our strategic actions, including shifting the customer mix in Americas foodservice and incremental costs related to Asia’s strategy reset. We now expect full year 2023 constant currency revenue growth to be near the low end of our 7-12% range and fourth quarter gross margin to be in the mid-20%s.”

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