MALMO, SWEDEN — Oatly Group AB paid for its shift to an asset-light manufacturing model during the fourth quarter of fiscal 2023. The company took a non-cash asset impairment charge of $172.6 million and other costs of $29 million related to the discontinued construction of certain manufacturing plants. The company also said it may incur additional costs in fiscal 2024.
In January 2023, Oatly divested some manufacturing assets in North America to Ya YA Foods, Etobicoke, Ont., a contract manufacturer of aseptic food and beverage products. Then, in November 2023, the company ceased construction of two manufacturing plants in its Americas and EMEA business segments. The impairment charge and other costs are related to discontinuing the construction of the plants.
As a result, Oatly recorded a loss of $298.8 million during the fourth quarter ended Dec. 31, 2023, significantly higher than the loss of $125.2 million incurred during the same period of the year before. Quarterly revenue was $204.1 million, up from $195.1 million in 2022.
For fiscal 2023, the impairment charges contributed to a loss of $417 million, up from a loss of $392.6 million during fiscal 2022. On an adjusted EBITDA basis, Oatly incurred a loss of $157.6 million during the year, which was an improvement over fiscal 2022 when the company incurred an adjusted EBITDA loss of $267.9 million.
Annual sales in 2023 were $783.3 million, up from $722.2 million in 2022.
Jean-Christophe Flatin, chief executive officer, said during a Feb. 15 conference call with securities analysts that 2023 was a “pivotal year” for Oatly, with management focusing on “stabilizing and recalibrating” the business. He added that reaching profitable growth is the company’s “north star.”
The company’s fiscal 2024 guidance indicates the north star remains in the distance. In fiscal 2024, Oatly is guiding constant currency revenue growth in the range of 5% to 10% and to incur an adjusted EBITDA loss in the range of $75 million to $60 million.
“At the midpoint, this would be a year-over-year improvement of over $100 million from where we landed in 2023,” said Marie-José David, chief financial officer. “We expect this improvement to be driven by an improvement in gross profit dollars with some benefit coming from SG&A as we continue to deliver on our communicated cost reduction program, we expect adjusted EBITDA dollars to be stronger in the second half than in the first half.”
David added that the adjusted EBITDA is below the company’s initial target.
“That is primarily driven by more conservatism around our assumptions on new customer acquisition and new product launches while continuing to prioritize brand-building investments to energize the brand,” she said. “We will continue to aggressively pursue new business and more efficient ways of working, and we have confidence in our volume-led growth in 2024. However, we believe that it's appropriate to have a more balanced outlook at this point.”
