Reducing Oatly’s growth in capacity
Malmo, Sweden — At Oatly Group AB, less is becoming more. Two production sites in the company’s Americas and EMEA business segments are no longer being built. This decision comes after Oatly decided in January to sell its North American production assets to Ya YA Foods, a third-party aseptic product maker.
“During a conference call with securities analysts on November 9 to discuss third quarter results, we have been taking a holistic look at the network with the overarching goals of ensuring we have the right amount of capacity when we need it while also being very efficient with our capital,” stated CEO Jean-Christophe Flatin. “We think we have adequate capacity at our disposal to sustain our growth for the foreseeable future.
“We think that this will contribute to the accomplishment of our capital efficiency and appropriated time expansion targets. Additionally, by streamlining and simplifying the supply chain and lowering its complexity, it ought to help us concentrate more effectively. Our confidence in our longer-term margin targets is also bolstered by this greater focus and simplicity, since we anticipate being able to devote more time and resources from our team to growing the business.
The company earned a profit in the quarter that concluded on September 30, suggesting that the shift to an asset-light business model is having an effect. After recording a loss of $44 million in the third quarter of fiscal 2022, the company’s net income for the period was an improvement at 7¢ per share on the common stock.
Sales for the quarter increased slightly to $188 million from $183 million the previous year.
Sales in Oatly’s main business segment, the Europe, Middle East, and Africa (EMEA) region, increased 23% to $102 million in the quarter. Retail accounted for about 83.5% of the quarter’s total sales, while unit volume sales increased 6.3% to 72 million liters. Compared to the prior year, when the business segment reported a loss of $11.7 million, the segment earned a profit of $11.8 billion.
Chief Operating Officer Daniel Ordonez stated, “We expect this momentum going forward, helped by many of our new customer wins, including Coffee Fellows, which we recently announced.” “We’re actively working to maintain the momentum and are pleased with the performance in the established markets.”
It was a little different situation in Oatly’s Americas market, where sales decreased by 4% to $58.5 million from $60.7 million in the previous year. Volume sales decreased to 34 million liters from 36 million liters, and the business unit reported a $7.5 million loss. This is less than the company’s $17.9 million loss during the third quarter of fiscal 2022.
You may also like:
Food security in emerging nations: issues and remedies
Are drinks the secret to increasing cannabis use among consumers?
Managing the lack of labour for mushroom picking
According to the corporation, the foodservice channel experienced a decline in volume of 5.6%, which was somewhat compensated by an increase in the retail channel. In the third quarter of 2023, the retail channel accounted for roughly 53.3% of America’s sales, up from 53.2% in the same quarter the previous year.
Mr. Ordonez declared, “I am happy to report that we are back to gaining retail market share in the Americas.” “We are confident that consumers will continue to switch to Oatly over time, even though the category growth rates have not been as robust as we would like.”
In Asia, sales fell 31% to $27.3 million from $39.8 million the year before. The segment recorded a loss of $21.6 million compared to $30.3 million in 2022.
The company attributed the sales decline to a refocusing of Asia business into the foodservice channel.
For the first nine months of fiscal 2023, Oatly remains solidly in the red, recording a loss of $118.3 million, which is an improvement over the same period in fiscal 2022 when the company recorded a loss of $267.4 million.
Sales for the period rose to $579.2 million, up from $527.2 million the year before.