Sweden-based alt-dairy business Oatly saw its losses narrow in the second quarter, with CEO Jean-Christophe Flatin describing it as “another quarter of solid progress”.
Oatly saw its losses narrow to $11m, a $41.5m improvement on the prior year period, while revenue was up 3.2% at $202.2m.
Speaking to analysts after Oatly posted its second-quarter numbers, Flatin said: “In the second quarter, we grew volumes in every segment, continued to structurally reduce our cost structure and continued to invest to further strengthen our brand.”
He added: “We continue to make good progress on strengthening the business and moving towards achieving profitable growth. You can see that clearly in our accelerated top line growth and improved margins as well as how we are activating the brand in each of our markets.”
Oatly's North American operation reported its first full quarter of positive adjusted EBITDA, with the company booking $1.2m in the three months to 30 June compared to a loss of $10.9m a year earlier.
COO Daniel Ordonez told analysts the earnings had been achieved as a “direct result of disciplined execution throughout the entire organisation and staying true to our north star of profitable growth”.
The company, the world’s largest oat drink business, has also seen positive signs from its China operation.
Flatin said the company had “seen positive test results with China's largest coffee chain”.
He added: “Our Greater China business has been executing very well on its improvement plan we announced just one year ago on our second quarter 2023 earnings call.
“After a year of focused execution, I am proud to announce the segment generated positive adjusted EBITDA for one month during the quarter. I recognise that one month is just one month but this is a clear sign that segment is moving in the right direction.”
Flatin also sought to highlight how Oatly's group adjusted EBITDA was improving. “In 2022, we reported quarterly losses between $53m to $83m. Today, we are reporting a quarterly loss of just $11m and our fourth consecutive quarter of sequentially improving adjusted EBITDA,” he said.
On the back of the second-quarter results, Oatly has tweaked its full-year guidance upwards.
It now expects constant currency revenue growth in the range of 6% to 10% compared to prior guidance of 5% to 10%. Adjusted EBITDA is expected to be in the range of -$35m to -$50m compared to prior guidance of -$35m to -$60m.
Flatin told analysts Oatly “remains on track with both our previously announced SG&A cost-saving programme, as well as our previously announced exit of our manufacturing facilities in the US and the UK”.
Ordonez pointed out the foodservice side of its business grew 9% in the quarter.
“As we have discussed in the past, we believe there is significant opportunity to drive solid robust growth in the foodservice channel,” he said.
Responding positively to Oatly’s performance, John Baumgartner, an analyst with Mizuho Securities, said: “Progress is evident across all areas including revenue (positive vol/mix and pricing and growth in retail and foodservice), profit (inflection to EBITDA positive in North America and China break even sooner than expected), and cash flow (moderating cash burn).
“Although FY24 guidance was only modestly raised, revenue momentum is building.”
