Oatly AB: Reports Second Quarter 2022 Financial Results

Malmö / SE. (oat) Sweden’s Oatly Group AB, the world’s original and largest oat drink company, announced financial results for the second quarter and six months ended June 30, 2022. CEO Toni Petersson commented, «We delivered strong second quarter financial results with sales growth of 22 percent, or 30 percent in constant currency, despite several headwinds including Covid-19 lockdowns in China. Profitability metrics improved compared to the first quarter of 2022 and we expect this trend to continue in the second half of the year. As we expand and scale our more localized production footprint while remaining disciplined in our capital allocation, we are confident in our ability to achieve much better production economics and operating efficiencies, reduce our environmental impact, and achieve profitability. Global consumer demand remains as strong as ever and we have a proven multi-channel strategy that we believe positions us well for long-term growth and profitability.»

Second Quarter 2022 Highlights

  • Revenue of USD 178.0 million, a 21.8 percent increase compared to USD 146.2 million in the prior year period, which included a foreign currency exchange headwind of USD 11.7 million. In constant currency, revenue increased 29.7 percent year-over-year to USD 189.6 million.
  • EMEA revenue of USD 82.5 million, a 5.0 percent increase compared to USD 78.5 million in the prior year period, which included a foreign currency exchange headwind of USD 10.6 million. In constant currency, EMEA revenue increased 18.6 percent year-over-year to USD 93.1 million.
  • Americas revenue of USD 51.8 million, a 25.2 percent increase compared to USD 41.3 million in the prior year period.
  • Asia revenue of USD 43.7 million, a 66.3 percent increase compared to USD 26.3 million in the prior year period, which included a foreign currency exchange headwind of USD 1.0 million. In constant currency, Asia revenue increased 70.1 percent year-over-year to USD 44.7 million.
  • Gross profit of USD 28.1 million, or a 15.8 percent gross profit margin, compared to USD 38.6 million, or a 26.4 percent gross profit margin, in the prior year period.
  • Net loss attributable to shareholders of the parent was USD 72.0 million compared to net loss of USD 59.1 million in the prior year period.
  • Ebitda loss of USD 62.6 million compared to an Ebitda loss of USD 43.5 million in the prior year period.
  • Adjusted Ebitda loss of USD 53.4 million compared to Adjusted Ebitda loss of USD 31.9 million in the prior year period.

Six Month 2022 Highlights

  • Revenue of USD 344.1 million, a 20.2 percent increase compared to USD 286.2 million in the prior year period, which included a foreign currency exchange headwind of USD 16.8 million. In constant currency, revenue increased 26.1 percent year-over-year to USD 360.9 million.
  • EMEA revenue of USD 173.0 million, an 8.0 percent increase compared to USD 160.2 million in the prior year period, which included a foreign currency exchange headwind of USD 16.2 million. In constant currency, EMEA revenue increased 18.1 percent year-over-year to USD 189.2 million.
  • Americas revenue of USD 98.8 million, a 31.9 percent increase compared to USD 74.9 million in the prior year period.
  • Asia revenue of USD 72.4 million, a 41.5 percent increase compared to USD 51.2 million in the prior year period, which included a foreign currency exchange headwind of USD 0.6 million. In constant currency, Asia revenue increased 42.6 percent year-over-year to USD 72.9 million.
  • Gross profit of USD 44.0 million, or a 12.8 percent gross profit margin, compared to USD 80.5 million, or a 28.1 percent gross profit margin, in the prior year period.
  • Net loss attributable to shareholders of the parent was USD 159.4 million compared to net loss of USD 91.4 million in the prior year period.
  • Ebitda loss of USD 144.0 million compared to an Ebitda loss of USD 68.2 million in the prior year period.
  • Adjusted Ebitda loss of USD 124.8 million compared to USD 54.4 million in the prior year period.
  • Capital expenditures were USD 111.3 million for the six months ended June 30, 2022 compared to USD 134.4 million in the prior year period.

Second Quarter 2022 Results

Revenue increased USD 31.8 million, or 21.8 percent, to USD 178.0 million for the second quarter ended June 30, 2022, compared to USD 146.2 million for the second quarter ended June 30, 2021. Excluding a foreign currency exchange headwind of USD 11.7 million, revenue for the second quarter was USD 189.6 million, or an increase of 29.7 percent, using constant exchange rates. The revenue increase was primarily driven by additional supply from the Company’s facilities to meet the global demand for its products. Sold volume for the second quarter of 2022 amounted to 121 million liters compared to 95 million liters last year, an increase of 27.4 percent. Produced finished goods volume for the second quarter of 2022 amounted to 124 million liters compared to 106 million liters for the same period last year, an increase of 17.0 percent.

The Company continued to experience broad-based revenue growth across retail and foodservice channels in the second quarter of 2022. The foodservice channel contribution continued to increase in the second quarter of 2022 compared to the prior year period despite Covid-19 restrictions, and the Company also experienced strong growth in e-commerce sales in China. In the second quarter of 2022 and 2021, the foodservice channel accounted for 35.0 percent and 33.2 percent of the Company’s revenue, respectively, the retail channel accounted for 56.8 percent and 61.5 percent of the Company’s revenue, respectively, and the other channel, comprised primarily of e-commerce sales, accounted for 8.2 percent and 5.3 percent of the Company’s revenue, respectively.

Gross profit was USD 28.1 million for the second quarter of 2022 compared to USD 38.6 million for the second quarter of 2021 and USD 15.8 million for the first quarter of 2022. The gross profit margin sequential increase of 630 basis points in the second quarter of 2022 compared to the first quarter of 2022 was primarily due to:

  • Positive gross margin impact from higher share of self-manufacturing including localization of production estimated of 320 basis points,
  • EMEA co-packer consolidation charge recorded in the first quarter with no such charge in the second quarter of 270 basis points,
  • The implementation of the EMEA price increases of 190 basis points,
  • Other items, net, of approximately 30 basis points, offset by,
  • Short-term underutilization of new facilities and expansion of our logistic network supporting our growth of approximately 180 basis points.

The Company expects that the continued ramp-up of its production facilities in the second half of 2022 and the pricing actions in the U.S. will further drive gross profit margin expansion.

Research and development expenses in the second quarter of 2022 increased USD 1.7 million to USD 5.7 million compared to USD 4.0 million in the prior year period.

Selling, general and administrative expenses in the second quarter of 2022 increased USD 14.0 million to USD 97.1 million compared to USD 83.1 million in the prior year period. The increase in expenses was primarily due to an increase of USD 5.1 million in employee related expenses, which include USD 4.1 million in non-cash costs for the Company’s Long-Term Incentive Plan («LTIP») due to increased headcount as the Company continues to invest in its growth and comply with public company obligations. The Company also incurred USD 6.2 million in increased costs relating to branding and marketing expenses, offset by USD 4.2 million from the depositary relating to the administration of the ADR program, USD 1.9 million in lower costs relating to external consultants, contractors, other professional fees and favorable impact from foreign exchange of USD 7.8 million. The USD 1.9 million in decreased costs relating to external consultants, contractors and other professional fees was primarily a result of the one-off consultancy expenses incurred in relation to our initial public offering during the second quarter of 2021. Excluding the one-off impact from the initial public offering related costs, there was an increase of USD 5.2 million in costs relating external consultants, contractors and other professional fees for the second quarter of 2022. Customer distribution costs increased by USD 5.0 million mainly due to higher revenue and freight customer rates.

Other operating income for the second quarter of 2022 of USD 0.2 million included primarily a gain on disposal of property, plant and equipment, offset by a net foreign exchange loss, compared to other operating income in the second quarter of 2021 of USD 0.4 million comprised primarily of a net foreign exchange gain.

Net loss attributable to shareholders of the parent was USD 72.0 million for the second quarter of 2022 compared to net loss of USD 59.1 million in the prior year period.

Ebitda loss for the second quarter of 2022 was USD 62.6 million, compared to an Ebitda loss of USD 43.5 million in the second quarter of 2021. The increase in Ebitda loss was primarily a result of lower gross profit, higher employee related expenses including share-based compensation costs, higher branding and customer distribution expenses, public company costs and other operating expenses as the Company scales its global operations to support growth across three continents, offset by positive impact from foreign exchange rates.

Adjusted Ebitda loss for the second quarter of 2022 was USD 53.4 million, compared to a loss of USD 31.9 million in the second quarter of 2021. The increase in Adjusted Ebitda loss was primarily related to lower gross profit, higher branding and customer distribution expenses, public company costs and other operating expenses as the Company scales its global operations to support growth across three continents, offset by positive impact from foreign exchange rates.

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