Despite reporting higher Q4 revenue, Oatly today posted a steeper net loss primarily driven by the cancellation of new facilities that would have expanded production capabilities.
The decision to halt construction of the brand’s new plants in the U.K., the U.S. and China was made last year under the direction of previous CEO Toni Peterson and aimed at reaching profitability in FY 2024 with an “asset-light” model. However, the move has hurt the business, at least in the short term.
Here’s the overview:
- The oatmilk giant reported Q4 revenues grew 4.6% YOY to $204.1 million, while constant currency revenue increased 2.5%.
- In the quarter ended December 31, Oatly’s loss was $298.7 million compared to a net loss of $125.2 million in the prior year period.
- Operating income and expenses increased to $204.3 million compared to an expense of $41.1 million in the prior year period, consisting primarily of non-cash impairment charges of $172.6 million and other costs of $29 million related to discontinued construction of the new facilities.
- During Q4, global foodservice accounted for 38% of revenue while food retail made up 59%. Broken up by region, the Americas made up 32% of the company’s overall revenue.
“This year was a pivotal year where we executed a significant re-calibration of the entire organization to stabilize our business and ensure we are properly positioned for long-term success,” said newly-appointed CEO Jean-Christophe Flatin in a statement. “We did this while driving solid top-line growth and significant improvements in our gross profit, selling, general, and administrative expenses, and operating cash flow.”
During Q4, the Americas segment saw its first month of positive adjusted EBITDA resulting from “significant” profit improvements via margin and mixed costs savings. Additionally, in the past four weeks, Oatly’s Americas division has seen a 25.2% increase in value share in the chilled oatmilk category.
As discussed last quarter, Oatly has been “aggressively pursuing” new foodservice customers to drive better growth and better margins in the Americas. In Q4, the U.S. segment grew its foodservice revenue by 4.5% y/y and, excluding its largest foodservice customer, grew the business by nearly 26%, Flatin told investors during today’s earnings call.
In an effort to achieve profitability in a more efficient manner, the Malmo, Sweden-based company in 2023 continued its co-packer consolidation, reducing total COGS per liter by 12% between Q1 and Q4. According to Flatin, this improvement was enabled by Oatly’s long-term strategic hybrid manufacturing partnership with Ya Ya Foods in North America. As part of the agreement, Oatly has continued to produce its proprietary oat base at both the Ogden, Utah and Fort Worth, Texas facilities before transferring them to Ya Ya Foods to be co-packed into Oatly products.
Looking ahead to FY 2024 outlook, the company expects constant currency revenue growth in the range of 5% to 10%, adjusted EBITDA loss in the range of $35 million to $60 million and capital expenditures below $75 million.
Oatly will rely on its new plant milks, Unsweetened Oat Milk and Super Basic Oatmilk to “go deeper with existing customers” while relying on marketing activations with organizations such as Minor League Baseball (MiLB) to reach a broader audience.
“As we look to 2024, our financial guidance reflects top line goals while delivering significant bottom line improvement as we maintain our focus on driving the business towards profitable goals,” Flatin told investors.