Oatly shares tumble as plant-milk maker warns on revenues

Oatly, the Swedish oat milk maker, has warned that a combination of slower production in the US, inflationary pressures and renewed Covid-19 restrictions in Asia will hit full-year revenues, sending shares in the group tumbling.

The company, which was valued at $10bn in its initial public offering in New York in May, pinned the blame on Asian customers closing “food service facilities”, driver shortages in the UK and slower than expected production at a new plant in Utah.

Revenues for the year will exceed $635m, up from 2020, but short of analysts’ estimates of $694m. The forecast came alongside weaker than expected third-quarter revenues, which were $171m, shy of the $185.5m Wall Street expected.

The warning is the latest blow for Oatly, which chief executive Toni Petersson has transformed into a globally recognised brand by tapping into rising appetite for alternatives to dairy products but that has endured a chequered start as a public company.

Shares in the group, which were sold for $17 a piece, were down by almost a fifth in early trading in New York at $9.70.

The group’s operating performance showed that demand was strong, but “the volatility of the macro environment and growing pains ultimately resulted in disrupted production and distribution,” according to Nik Modi, analyst at RBC Capital Markets.

With the cost of oats and rapeseed oil as well as packaging all climbing, Oatly said it would lift prices in certain areas in Europe and the US next year. Nevertheless, the company, which is based in the Swedish city of Malmo, said improvements in its gross margin for 2022 would be lower than it had previously indicated.

The group also took the axe to its planned capital expenditure this year, cutting it to a range of $280m-$320m from $350m-$400m.

However, the group expects results to gradually improve over the course of 2022 as its scaling up of production leads to lower costs, alongside a projected fall in freight and logistic costs.

Petersson warned of “certain variability in our strong growth rates quarter to quarter”, but insisted the group felt “very confident with our business fundamentals” and “positive about entering 2022”.

The warning from Oatly echoes that of Beyond Meat, the plant-based meat company, which last week blamed labour shortages for the lower than expected revenue growth.

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