Swedish oat drink maker reports robust third quarter sales growth, but revenues fall short of expectations due to production glitches, supply problems and fresh Covid-19 restrictions
Oatly has reported disruption across its production, distribution and foodservice customers in the third quarter | Photo credit: Oatly
Reporting its third quarter results to 30 September 2021, Oatly said revenues increased 49.2% to $171.1m compared to the same period in 2020.
The Swedish dairy alternative brand said the revenues increase was primarily driven by additional supply from the company’s Netherlands production facility, which was opened in late 2019 to produce 120 million litres of oat-based drinks for the Dutch and European markets.
However, the gains were offset by significant disruption across Oatly’s production and distribution network elsewhere. Mechanical and automation issues experienced at its US facility in Utah in August negatively impacted revenues by around $3m, the company said.
Meanwhile, temporary foodservice location closures in Asia due to fresh Covid-19 restrictions cost the company another $3m and a truck driver shortage in the UK resulted in a further $1m setback for the company.
The disruption has led Oatly to downgrade its full-year revenue expectations to $635m from the $690m+ it forecast in August 2021
Commenting on the challenges his company continues to face, Oatly CEO Toni Petersson said the setbacks were a “temporary headwind” and that 2022 would see Oatly “have an increased share of shelf space at retail.”
“In EMEA, we are starting to build supply to meet consumer demand, but the pace at which we expected to increase revenue in new and existing retailers and to open new markets is slower than we anticipated as we navigate a dynamic COVID operating environment,” Petersson said.
“In the Americas, we are pleased with the weekly production output improvements at our Ogden, Utah facility to-date in the fourth quarter, as we navigate a challenging supply chain environment,” Petersson added.
In Asia, where the Delta variant has caused renewed tightening of public health measures and trading restrictions, Petersson said Oatly was “closely monitoring the situation.”
In October 2021, Petersson revealed
in an interview with Bloomberg
that Oatly was only fulfilling around 70% of orders, including to Starbucks stores, as demand outstripped supply globally.
Despite the disruption, Oatly produced 131 million litres of finished product during the third quarter, a 77% increase on the same period in 2020.
Indicating the continued recovery of hospitality businesses worldwide, Oatly’s foodservice channel accounted for 35.8% of the company’s revenue in the third quarter, up from 27.3% during the same period in 2020. Meanwhile, its retail channel accounted for 59.4% of sales, down from 69.4% a year ago.