Malmö / SE. (oat) Sweden’s Oatly Group AB, the world’s original and largest oat drink company, announced financial results for the third quarter and nine months ended September 30, 2022.
Toni Petersson, Oatly’s CEO, commented, «Third quarter financial results were below our expectations, largely driven by COVID-19 restrictions in Asia, production challenges in the Americas, and continued foreign exchange headwinds. However, we continue to see strong velocities, year-over-year sales volume growth, and minimal price elasticity globally which we believe demonstrates the power and resilience of the brand. To position Oatly for our next phase of growth, we have taken decisive and strategic actions to improve our operational efficiencies in a volatile macroeconomic environment with an even more focused allocation of resources and capital. These initial actions will simplify our organizational structures and the execution of our supply chain network expansion, and we expect more profitable growth going forward with a more asset-light strategy.»
Oatly has initiated several strategic actions to adapt its supply chain network strategy and simplify the organizational structure in order to prepare for the next phase of continued high growth. The Company believes these actions will increase the agility of the organization and drive profitability with a more asset-light strategy.
The framework for the supply chain network strategy is centered on focusing investments on Oatly’s proprietary oat-base technology and capacity, which is expected to reduce the capital intensity of future facilities and have a positive effect on our cash flow outlook. The Company is also actively pursuing manufacturing partners to create a more hybrid production network across select geographies. This is in addition to the phasing of capital expenditures and production projects described last quarter, which has already had a positive impact on the Company’s cash flow in the near to medium-term.
The strategic actions to simplify the organizational structure are expected to lead to a more balanced growth and profitability equation moving forward. The Company is reviewing the organizational structure to adjust the fixed cost base globally. To start, the Company is executing an overhead and headcount reduction impacting up to 25 percent of the costs related to the group corporate functions and regional EMEA layers. By doing this, the Company expects annual savings up to USD 25 million from the reorganization, which will take effect starting in the first quarter 2023. The Company has identified incremental opportunities in the rest of the organization, from which it expects up to USD 25 million in additional annual savings in the first half of 2023. The Company is unable to make a reasonable determination of an estimate of the severance and other costs associated with its organizational restructuring plans at this time. The Company will provide additional disclosure at such time as it determines a precise amount of the costs and charges associated with these actions.
As part of this review, Jean-Christophe Flatin, Global President, has assumed oversight of the global supply chain network following the departure of the Company’s Chief Supply Chain Officer, while Daniel Ordonez, Chief Operating Officer, has assumed oversight of the EMEA markets following the departure of the Company’s EMEA President. The Company continues to evaluate its global operations and potential opportunities to recalibrate the organizational structure for its next phase of growth.
For additional information please read the company’s PDF file below (106 KB):20221115-OATLY-Q3-2022