Oatly Group AB (OTLY) has reported mixed results for the fourth quarter of 2021, as earnings lagged but revenues surpassed expectations. The Swedish food company engages in the production of alternatives to dairy products from oats.
Shares fell 2.5% in Wednesday’s extended trading session after the company outlined temporary disruptions at some of its production facilities due to COVID-19, supply chain issues and increased inflationary pressures.
Results in Detail
Oatly’s fourth-quarter revenues increased 46.3% year-over-year to $185.9 million and surpassed analysts’ estimates of $174.2 million.
The revenue growth was aided by additional supply from a new production facility in Vlissingen, a city in the southwestern Netherlands. However, it was offset by lower production in Utah due to temporary mechanical and automation issues, COVID-19 related closures in Asia, and a dearth of truck drivers in the U.K.
Further, Oatly reported a quarterly loss of $0.13 per share, wider than analysts’ expectations of a loss of $0.09 per share. The company had reported a loss of $0.08 per share in the year-ago quarter.
The CEO of Oatly, Toni Petersson, said, “We continue to focus on prioritizing growth investments over profitability to increasingly scale our operations to best position Oatly to serve customers and consumers, with the understanding that this creates some near-term margin headwinds.”
“While we experienced inflationary cost pressures and supply chain challenges in certain areas of our business during the fourth quarter, we continue to believe that by having more localized self-manufacturing production, we can achieve much better production economics and operating efficiencies, reduce our environmental impact, and increase profitability over the next several years,” he added.
Guidance
Oatly anticipates full-year Fiscal 2022 revenues to be between $880 million to $920 million. Further, the company expects to incur capital expenditures in the range of $400 million and $500 million.
In the long run, Oatly seeks to generate a gross profit margin of more than 40% and an adjusted EBITDA margin of nearly 20%, as it benefits from a much larger self-manufacturing footprint globally, greater economies of scale and continued strong revenue growth.
Analysts’ View
Following the release, Jefferies analyst Robert Dickerson reiterated a Buy rating on the stock with a price target of $20, which implies 249.7% upside potential to current levels.
Overall, the stock holds a Moderate Buy consensus rating based on 4 Buys and 2 Hold. The average Oatly price target of $13.57 implies 137.2% upside potential to current levels. However, shares have lost 71.7% over the past year.
News Sentiment
News Sentiment for Oatly is Very Positive based on 14 articles over the past seven days. All the articles have Bullish sentiment, compared to a sector average of 64%, and none have Bearish Sentiment, compared to a sector average of 36%.
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