An earnings miss and cut to full-year forecasts sowed a big drop for Oatly Group ( NASDAQ: OTLY ) stock s in pre-market trading on Monday.
The Swedish dairy alternative provider posted a wider than expected loss for the third quarter while a modest 7% jump in revenue from the prior year to $183.03M came up $28.07M short of consensus estimates. The latter figure was also an unexpected step back from $199.7M in the year prior
“Third quarter financial results were below our expectations, largely driven by COVID-19 restrictions in Asia, production challenges in the Americas, and continued foreign exchange headwinds,” CEO Toni Petersson commented. However, we continue to see strong velocities, year-over-year sales volume growth, and minimal price elasticity globally which we believe demonstrates the power and resilience of the brand.”
He added that the company has taken “decisive and strategic actions” to shore up its supply chain and improve operational efficiencies. The actions include a 25% headcount reduction across group corporate functions and regional EMEA layers.
Despite the slated cost-cuts, sales are expected to remain far below consensus expectations. Management now expects between $700M to $720M in full-year sales as compared to $800 to $830M reflected in prior projections and well below the consensus of $796.31M.
“For fiscal 2022, we are lowering our outlook primarily to reflect COVID-19 pressures negatively impacting sales in Asia, operational challenges in Americas which limits our ability to accelerate sales momentum, and continued foreign exchange headwinds,” Petersson explained. “We believe these challenges are transitory and that we have significant opportunities for growth as these headwinds subside. In the meantime, we have taken actions to adjust our supply chain network strategy and simplify our organizational structure for a more balanced growth equation moving forward."
The company’s earnings release notes that Jean-Christophe Flatin, Global President, has been charged with overseeing the company’s global supply chain after the exit of its Chief Supply Chain Officer. Meanwhile, COO Daniel Ordonez has assumed oversight of the EMEA markets following the departure of EMEA President and staff cuts across that segment. An adjusted EBITDA margin forecast was not provided as “the items necessary to reconcile these items are not within Oatly’s control.”
Shares of Oatly Group AB ( OTLY ) slumped over 13% lower in premarket trading, extending an over 70% slide in 2022.
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Oatly stock slides after missing earnings expectations, slashing sales estimates