Oatly has reported its financial results for the third quarter of 2024, showing significant improvements in gross margin, volume growth, and strong progress in North America, moving closer to profitability.
The company’s revenue for the second quarter increased by 10.9% to $208 million, or 9.6% year-on-year when excluding currency fluctuations.
“I am pleased to report another quarter of solid progress in strengthening our business”
Gross profit nearly doubled from $32.6 million in 2023 to $62.0 million in 2024, and the gross margin in the third quarter was 29.8%, an improvement of 12.4 percentage points over the same period in the previous year. These improvements were mainly due to enhanced supply chain efficiency, particularly in North America and Greater China, and a strategic shift in product mix in Greater China, according to the report.
Increased revenue in retail and food service
Oatly reports solid overall volume growth of 13%, with sold volume rising to 141.3 million liters compared to 125 million liters in the third quarter of 2023. According to the report, both retail and food service saw increased revenue, supporting the growth.
The Swedish company also reduced its adjusted EBITDA loss to $5 million for the quarter, down from a $36 million loss in the previous period. This was driven by a higher gross profit and lower selling, general, and administrative expenses.
CEO Jean-Christophe Flatin shared, “I am pleased to report another quarter of solid progress in strengthening our business. Our team’s continued focus on solid execution has enabled us to drive profitable growth in each of our three operating segments.”
Continued market expansion
The Europe & International division’s revenue increased by $6.3 million, or 6.1%, reaching $109.9 million in the third quarter of 2024, compared to $103.5 million in the same period the previous year. Sales of Barista and ambient oat milk in established markets and continued market expansion in Europe fueled the volume growth, said the company.
About 82% of the Europe & International revenue came from the retail channel, consistent with figures from the previous year. The volume of finished goods sold increased from 73.2 million liters in Q3 2023 to 77.2 million liters in the same period of 2024.
The unit’s adjusted EBITDA increased to $12.4 million from €11.53 million due to higher gross profit, partially offset by higher selling, general, and administrative expenses.
Revenue in North America rose by 18.1%, reaching $69.1 million, boosted by a 17.6% increase in the volume of sold finished goods, which grew to 39.5 million liters. This expanded distribution and new product launches across retail and food service channels propelled this volume growth.
Notably, 52% of the revenue came from the retail channel, a slight shift from 53% in the previous year, indicating a broader revenue distribution. Importantly, North America’s adjusted EBITDA showed substantial improvement, shifting from an $8.0 million loss to a $3.3 million profit. This turnaround was mainly due to higher gross profit and reduced selling, general, and administrative expenses.
Meanwhile, revenue in the Greater China business rose by $3.5 million, marking a 13.7% increase to $29.1 million for the third quarter of 2024, compared to $25.6 million in the prior year. The increase was largely driven by an expansion into the food service channel, which now accounts for 72% of revenue, up from 68%. Additionally, the volume of sold finished goods increased substantially from 18.1 million liters to 24.6 million liters.
Greater China’s adjusted EBITDA improved by $18.1 million to $1.6 million, compared to a loss of $16.5 million in the prior year period. The improvement in adjusted EBITDA is attributed to the company’s strategic reset in the region, “underscoring the success of its refined business strategies and operational improvements.”
Toward profitable growth
Oatly has adjusted its full-year outlook due to current economic conditions and ongoing strategic actions. When accounting for currency fluctuations, it anticipates revenue growth will be at or slightly below the lower end of its earlier forecast range of 6% to 10%.
“As we move forward, we will maintain our north star of driving the total business toward structural, consistently profitable growth”
Meanwhile, the full-year adjusted EBITDA is forecast to remain near the more favorable end of its prior guidance range of -$35 million to -$50 million, indicating potentially better operational profitability than initially thought.
Furthermore, the company aims to reduce its capital expenditures to below $55 million, an improvement from its earlier target of below $70 million, signaling more efficient capital management or adjustment in investment plans.
“As we move forward, we will maintain our north star of driving the total business toward structural, consistently profitable growth, and we intend to continue to invest behind our unique brand voice to recruit more consumers to our brand and further stimulate demand,” Flatin added.
