Swedish-oat milk giant expects FY 2021 adjusted EBITDA loss of $108m on increased manufacturing investment
Supply struggles cause Oatly to produce 2/3 of its overall demand in Q2

Oatly was hit by significant manufacturing headwinds in Q2 as demand for oat milk outpaced the company’s supply across a number of markets.

The Nasdaq-listed group was restricted to providing around 2/3 of its oat milk demand during the period, leading to Q2 revenue being impacted by $12 million to $14 million.

Speaking during Oatly’s first earnings report since launching its IPO in May, CEO Toni Petersson told analysts: “Our finished goods volume was 106 million litres for the second quarter as compared to 74 million litres for the same period last year and increased 43%.

“However, global demand for Oatly products continued to outpace our supply, with capacity constraining our growth in the second quarter and certain Covid-19 and start-up manufacturing headwinds impacted our revenue,” Petersson added.

Gross margin in Q2 decreased by 5.9% year-over-year to 32.3% on higher logistics expenses in EMEA and the Americas and increased shipment costs between Europe and Asia.

“We continue to expect variability in our gross margin quarter-to-quarter based primarily on the mix of revenue by geography and sales channel as well as the mix of our manufacturing output,” group CFO Christian Hanke said.

“On an annualised basis we expect to continue to see improvement in our gross margin year-over-year, starting in 2022, with a long-term goal of 40%,” he added.

Hanke said he expects revenue to improve in Q3, although full-year 2021 adjusted EBITDA losses are expected to reach $108 million as the company continues to invest in its staff, IT operations and manufacturing facilities.  

Go East

During the quarter, Oatly opened a new production facility Singapore and announced plans for an additional facility to be established in Maanashan, China later in the year.

The new plants will help localise manufacturing efforts in Asia to reduce production reliance on Europe and cut the company’s environmental impact.

Oatly COO Peter Bergh said these additional facilities would allow the company to increase its production output by 200% YoY by generating approximately one billion litres of finished goods by the end of 2022.

“These two facilities are estimated to add an incremental 400 million litres of finished goods from 2023 to support the demand for our products globally,” Bergh told analysts.

Petersson added: “We expect to gain increased operating efficiencies, reduce the environmental impact and increase profitability as the region begins to reduce production reliance on EMEA.”

The company’s outlook for 2021 includes minimal contribution from its new facility in China, as it will open towards the end of the year.

Elsewhere, Petersson addressed the recent damning report by Spruce Point Capital, insisting the company “continues to fully stand by the accuracy and efficacy of [it’s] reporting”.

Following the report’s release in July, the company established a special committee, made up of forensic accountants, independent legal counsel and Oatly’s board of directors, to review the claims.  

Date published: 17 August 2021

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