Core Viewpoint - OATLY is considering a strategic review of its Greater China operations, which may include divesting this segment to accelerate growth and maximize business value [4][5][10] Financial Performance - OATLY's revenue for Q2 2025 increased by 3% to approximately $208 million, with a gross margin improvement of 3.3 percentage points to 32.5% [3] - The net loss attributable to shareholders was approximately $55.9 million, an increase of $25.5 million compared to the same period last year [3] - In Greater China, revenue decreased by 6.4% to $26.976 million, down from $28.8 million in the same quarter last year [3][4] Strategic Review - The strategic review of the Greater China business will consider various options, including potential divestiture, to enhance growth and value [4][5] - OATLY continues to operate in the Greater China market during this review, maintaining its production facilities and commitments to customers, consumers, and employees [4][5] Market Dynamics - OATLY has faced increased competition in the plant-based beverage market in China, with numerous local brands emerging [7][8] - The company initially struggled to penetrate the market but found success by positioning its products in coffee shops, leading to significant brand recognition [6][7] - The plant-based beverage market in China is experiencing a slowdown, with consumers becoming more price-sensitive and local brands capturing market share [9][10] Future Outlook - Analysts suggest that OATLY's ability to innovate and adapt is crucial for its success in the increasingly competitive market [10] - The company must evaluate its performance in 2025 before making final decisions regarding the Greater China operations [10]

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company reported revenue growth and a net loss for Q2 and H1 2025, with a slight decrease in total assets and cash as of June 30, 2025 [Consolidated Statement of Operations](index=4&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20operations) Oatly's Q2 2025 revenue increased 3.0% with improved gross profit and narrowed operating loss, but higher finance expenses led to an increased net loss Statement of Operations Highlights (in thousands of U.S. dollars) | Metric | Q2 2025 | Q2 2024 | Change | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 208,354 | 202,195 | +3.0% | 405,884 | 401,350 | +1.1% | | **Gross Profit** | 67,625 | 58,956 | +14.7% | 129,955 | 112,854 | +15.2% | | **Operating Loss** | (22,116) | (39,079) | -43.4% | (40,707) | (67,492) | -39.7% | | **Loss for the period** | (55,946) | (30,441) | +83.8% | (68,477) | (76,285) | -10.2% | | **Basic and diluted EPS ($)** | (0.09) | (0.05) | - | (0.11) | (0.13) | - | [Consolidated Statement of Financial Position](index=6&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20financial%20position) As of June 30, 2025, Oatly's total assets slightly decreased, cash and cash equivalents declined, while total liabilities increased primarily due to Convertible Notes, leading to a decline in total equity Financial Position Summary (in thousands of U.S. dollars) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | 803,055 | 803,980 | | Cash and cash equivalents | 67,931 | 98,923 | | **Total Liabilities** | 706,336 | 697,857 | | Convertible Notes | 328,981 | 324,395 | | **Total Equity** | 96,719 | 106,123 | [Consolidated Statement of Cash Flows](index=8&type=section&id=Interim%20condensed%20consolidated%20statement%20of%20cash%20flows) For H1 2025, net cash used in operating activities significantly decreased, while investing activities shifted to an outflow, resulting in an overall decrease in cash and cash equivalents Cash Flow Summary for Six Months Ended June 30 (in thousands of U.S. dollars) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash flows used in operating activities | (15,005) | (86,013) | | Net cash flows (used in)/from investing activities | (10,220) | 858 | | Cash flows used in financing activities | (8,151) | (20,213) | | **Net decrease in cash and cash equivalents** | **(33,376)** | **(105,368)** | [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20the%20interim%20condensed%20consolidated%20financial%20statements) Key notes detail segment performance, financing arrangements including significant debt from Convertible Notes and a Term Loan, and commitments such as minimum purchase obligations Revenue by Segment - Six Months Ended June 30 (in thousands of U.S. dollars) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Europe & International | 225,858 | 215,948 | | North America | 123,071 | 134,786 | | Greater China | 56,955 | 50,616 | | **Total** | **405,884** | **401,350** | Revenue by Channel - Six Months Ended June 30 (in thousands of U.S. dollars) | Channel | 2025 | 2024 | | :--- | :--- | :--- | | Retail | 262,567 | 251,371 | | Foodservice | 133,823 | 135,829 | | Other | 9,494 | 14,150 | | **Total** | **405,884** | **401,350** | - Oatmilk accounted for **91%** of the Group's revenue in the six months ended June 30, 2025, up from **89%** in the same period in 2024[37](index=37&type=chunk) - The company has minimum purchase commitments with suppliers, which led to volume shortfall expenses of **$5.6 million** in H1 2025, included in cost of goods sold[122](index=122&type=chunk) - On March 23, 2023 and April 18, 2023, the Company issued **$300 million** in 9.25% Convertible Senior PIK Notes due 2028, with an additional **$35 million** issued to Hillhouse in May 2023[105](index=105&type=chunk)[112](index=112&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q2 2025 revenue growth to Europe & International, with improved gross margin from supply chain efficiencies, while executing strategic actions and maintaining liquidity [Recent Developments and Trends](index=43&type=section&id=Recent%20Developments%2C%20Trends%20and%20Other%20Factors%20Affecting%20our%20Business) The company is executing strategic priorities for profitable growth, including organizational simplification, an asset-light supply chain strategy, and a strategic review of its Greater China business - The company is executing strategic actions to achieve profitable growth, focusing on reducing complexity and implementing an asset-light supply chain strategy[132](index=132&type=chunk) - The company has initiated a strategic review of its Greater China business, considering options up to a potential carve-out to accelerate growth and maximize value[135](index=135&type=chunk) - As part of its asset-light strategy, the company discontinued construction of facilities in Peterborough, UK, and Dallas-Fort Worth, Texas, and closed its production facility in Singapore[134](index=134&type=chunk) [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Q2 2025 revenue increased 3.0% (down 0.2% constant currency) driven by Europe & International, with gross margin expanding due to supply chain efficiencies and reduced operating expenses contributing to a narrowed operating loss Revenue by Segment - Constant Currency Change (Q2 2025 vs Q2 2024) | Segment | Revenue (As Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | | Europe & International | $118.2M | +5.7% | | North America | $63.2M | -6.8% | | Greater China | $27.0M | -6.6% | | **Total** | **$208.4M** | **-0.2%** | - Gross profit margin increased by **3.3 percentage points** to **32.5%** for Q2 2025, and by **3.9 percentage points** to **32.0%** for H1 2025, primarily driven by supply chain efficiencies in Europe & International[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - R&D expenses decreased by **57.7%** in Q2 2025, mainly because the prior year period included expenses related to a new product launch issue in North America[168](index=168&type=chunk)[169](index=169&type=chunk) - SG&A expenses decreased slightly by **0.2%** in Q2 2025 due to continued cost savings initiatives[170](index=170&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash reserves and undrawn credit facilities, with key debt instruments including a Term Loan B and Convertible Notes, and management believes current liquidity is sufficient for the next 12 months Liquidity Position as of June 30, 2025 (in millions of U.S. dollars) | Item | Amount | | :--- | :--- | | Cash and cash equivalents | $67.9 | | Undrawn bank facilities | $221.0 | - The company has a **$130 million** Term Loan B Credit Agreement, maturing in five years from April 2023, with an interest rate of Term SOFR + 7.5% (with a 2.50% floor)[183](index=183&type=chunk) - The company has issued over **$335 million** in aggregate principal of 9.25% Convertible Senior PIK Notes due 2028[191](index=191&type=chunk)[199](index=199&type=chunk) - Net cash used in operating activities for H1 2025 improved to **$15.0 million** from **$86.0 million** in H1 2024, driven by better operating results and working capital improvements[207](index=207&type=chunk) [Non-IFRS Financial Measures](index=59&type=section&id=Non-IFRS%20Financial%20Measures) The company uses Adjusted EBITDA and Free Cash Flow as key non-IFRS measures, both showing significant improvement in Q2 and H1 2025 due to better operating results and lower capital expenditures Adjusted EBITDA Reconciliation (in thousands of U.S. dollars) | Period | Loss for the period | Adjusted EBITDA | | :--- | :--- | :--- | | **Q2 2025** | (55,946) | (3,563) | | **Q2 2024** | (30,441) | (10,997) | | **H1 2025** | (68,477) | (7,294) | | **H1 2024** | (76,285) | (24,201) | Free Cash Flow Reconciliation (in thousands of U.S. dollars) | Period | Net cash used in operating activities | Capital expenditures | Free Cash Flow | | :--- | :--- | :--- | :--- | | **H1 2025** | (15,005) | (10,699) | (25,704) | | **H1 2024** | (86,013) | (20,420) | (106,433) | [Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks including foreign exchange, interest rate, credit, liquidity, and commodity price risk, with detailed disclosures available in the 2024 Annual Report - The company's primary market risks are foreign exchange, interest rate, credit, liquidity, and commodity price risk, with detailed disclosures available in the 2024 Annual Report[233](index=233&type=chunk) [PART II – OTHER INFORMATION](index=67&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=67&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it is not currently a party to any material legal proceedings - As of the report date, Oatly is not a party to any material legal proceedings[234](index=234&type=chunk) [Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) A new material risk factor concerns the strategic review of the Greater China business, with no guarantee of success or value enhancement, and potential negative impacts if unsuccessful - A new risk factor has been added regarding the strategic review of the Greater China business, noting that the process may not be successful or enhance shareholder value and could have a negative impact on the business[235](index=235&type=chunk)

Core Insights - Oatly Group AB reported revenue of $208.35 million for the quarter ended June 2025, reflecting a 3% increase year-over-year, but fell short of the Zacks Consensus Estimate by 0.54% [1] - The company's EPS was -$1.86, a decline from -$1.00 in the same quarter last year, resulting in an EPS surprise of -173.53% compared to the consensus estimate of -$0.68 [1] Revenue Breakdown - Revenue from Europe & International was $118.19 million, exceeding the two-analyst average estimate of $112.98 million [4] - Revenue from Greater China was $26.98 million, below the estimated $31.9 million by two analysts [4] - Revenue from North America was $63.19 million, slightly below the average estimate of $64.6 million from two analysts [4] Stock Performance - Oatly Group's shares have returned +19.2% over the past month, outperforming the Zacks S&P 500 composite's +5.9% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported a revenue growth of 3% in the quarter, but a decline of 0.2% on a constant currency basis [35] - Adjusted EBITDA was a loss of $3,600,000, which is consistent with the previous quarter's guidance [35] - Gross margin expanded by 330 basis points year-over-year to 32.5%, marking the best quarterly results as a public company [35][36] Business Line Data and Key Metrics Changes - The Europe and International segment grew volume by 9.4%, indicating that the growth playbook is effective [39] - North America experienced a revenue decline of 6.8%, primarily due to changes in sourcing strategy and the largest customer [39] - Greater China saw a constant currency revenue decline of 6.6%, reflecting a challenging macro environment [39] Market Data and Key Metrics Changes - The foodservice side of the Greater China business grew revenue by 12% in the first half of the year [33] - In Europe, the company achieved strong volume-led double-digit revenue growth, with EBITDA margins improving to over 20% in Q2 [15] Company Strategy and Development Direction - The company is focused on three priority areas: reducing costs, igniting top-line momentum, and driving profitability [7] - A strategic review of the Greater China business has been initiated to accelerate growth and maximize value [6][12] - The company plans to continue executing its growth playbook, particularly in North America, despite current challenges [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged slower-than-expected progress in North America and a soft macro environment in Greater China [6] - The company remains confident in its growth playbook and expects to see improvements in the second half of the year [43] - Management emphasized the importance of taste as a barrier to consumption and plans to enhance product offerings accordingly [62] Other Important Information - The company has identified additional SG&A savings, primarily from corporate expenses, to drive efficiencies without harming the business [66][68] - The cash outflow of $5,000,000 in Q2 was the best quarterly performance as a public company, indicating progress in cash management [41] Q&A Session Summary Question: Why is now the right time for the strategic review of China? - Management believes the business is now leaner and stronger, making it a good time to evaluate how to accelerate growth and maximize value [48][49] Question: What is the optimal outcome of the strategic review? - The company is considering a range of options, including a potential carve-out, but will not speculate on the ultimate outcome at this time [49] Question: What are the challenges in North America, and how can they be turned around? - Management noted that while the market is soft, there are early signs of improvement, and they are confident that strategies successful in Europe can be applied in North America [53][55] Question: How are the incremental SG&A savings derived? - Most savings will come from corporate expenses, focusing on efficiency without hurting the business [66][68]

Financial Data and Key Metrics Changes - The company reported a revenue growth of 3% in the quarter, but a decline of 0.2% on a constant currency basis [36] - Adjusted EBITDA was a loss of $3,600,000, which is consistent with the previous quarter's level and guidance [36] - Gross margin expanded by 330 basis points year over year to 32.5%, marking the best quarterly results as a public company [36][41] Business Line Data and Key Metrics Changes - The Europe and International segment grew volume by 9.4%, achieving the highest volume quarter ever [41] - North America experienced a 6.8% decline in revenue, primarily due to changes in sourcing strategy and the largest customer [41] - Greater China saw a 6.6% decline in constant currency revenue, reflecting a challenging macro environment [41] Market Data and Key Metrics Changes - The company achieved a 12% revenue growth in the foodservice side of the Greater China segment in the first half [34] - In Europe, the company reported a strong growth acceleration in the foodservice channel, with sustained growth rates for several quarters [20] - The retail channel in Greater China reached an all-time high in volume during the quarter [34] Company Strategy and Development Direction - The company is focused on three priority areas: reducing costs, igniting top line momentum, and driving profitability [7] - A strategic review of the Greater China business has been initiated to accelerate growth and maximize value [6][13] - The company plans to continue executing its growth playbook, which has shown success in Europe and is being adapted for North America [30][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged slower than expected progress in North America and a soft macro environment in Greater China, leading to a refined full-year outlook [6][12] - The company remains confident in its growth playbook and believes it will drive results despite current challenges [6][12] - Management emphasized the importance of taste as a barrier to consumption and is focused on enhancing product relevance to consumers [56][64] Other Important Information - The company has identified additional SG&A savings, primarily from corporate expenses, to drive efficiencies without sacrificing growth [66][68] - The cash outflow of $5,000,000 in Q2 was the best quarterly performance as a public company, indicating progress in cash management [43] - CapEx is expected to be approximately $20,000,000 for the full year, reflecting a disciplined investment approach [47] Q&A Session Summary Question: Why is now the right time for the strategic review of China? - Management believes the business is now leaner and stronger after recent resets, making it a good time to evaluate growth acceleration and maximize value [51][52] Question: What is the optimal outcome of the strategic review? - The company is considering a range of options, including a potential carve-out, but will not speculate on the ultimate outcome at this time [52] Question: What are the challenges in North America and how can they be turned around? - Management acknowledged the market's softness but noted that the underperformance is plateauing, and they see opportunities for growth through distribution and operational excellence [56] Question: How are the incremental SG&A savings derived? - Most savings will come from corporate expenses, focusing on efficiencies without harming the business, including centralizing contracts and improving negotiation processes [66][68]

Financial Performance & Outlook - Q2 2025 revenue increased by 30% year-over-year, but constant currency revenue decreased by 02%[88] - Gross margin improved to 325%, a 330 basis point increase compared to the previous year[88] - Adjusted EBITDA improved by $74 million year-over-year to $(36) million[88] - The company reaffirmed its 2025 Adjusted EBITDA outlook of $5 million to $15 million[20] - Capital expenditures for 2025 are expected to be approximately $20 million[20] Regional Performance - Europe & International segment revenue increased by 57% in constant currency[45] - Europe & International segment Adjusted EBITDA was 21% of revenue[45] - North America segment revenue was $63 million in Q2 2025[76] - Greater China foodservice revenue increased by 12% in H1[86] Strategic Initiatives - The company is undertaking a strategic review of its Greater China business[19] - The company is focused on aggressively pursuing cost efficiencies, aiming for a 10% year-over-year reduction in COGS per liter in H1[25] - The company is rolling out a refreshed playbook to ignite positive category momentum in more markets[18]

Core Insights - Oatly Group AB reported a second quarter revenue of $208.4 million, reflecting a 3.0% increase year-over-year, but a constant currency revenue decrease of 0.2% [4][5] - The company is focusing on cost efficiencies and has initiated a strategic review of its Greater China business to enhance growth and value [2][31] - Adjusted EBITDA loss improved to $3.6 million from a loss of $11.0 million in the prior year, driven by higher gross profit and reduced research and development expenses [12][14] Financial Performance - Second quarter gross margin increased to 32.5%, up 3.3 percentage points from the previous year, attributed to supply chain efficiencies [4][6] - The net loss attributable to shareholders was $55.9 million, an increase of $25.5 million compared to the prior year [4][11] - Total revenue for the first half of 2025 was $405.9 million, a slight increase from $401.4 million in the same period last year [5][49] Segment Performance - Europe & International segment revenue rose by 12.0% to $118.2 million, with a sold volume increase of 9.4% [21][22] - North America segment revenue decreased by 6.8% to $63.2 million, primarily due to a decline in sales to a major foodservice customer [23][24] - Greater China segment revenue fell by 6.4% to $27.0 million, driven by reduced sales in the foodservice channel [25][26] Cost Management - Research and development expenses decreased to $4.6 million from $10.9 million in the prior year, mainly due to prior year product launch issues [7] - Selling, general and administrative expenses slightly decreased to $84.1 million, reflecting ongoing efforts to reduce overhead costs [8] - Corporate expenses were $27.4 million, a minor decrease from the previous year [27] Cash Flow and Capital Expenditures - As of June 30, 2025, cash and cash equivalents stood at $67.9 million, with total outstanding debt of $449.6 million [28] - Capital expenditures for the first half of 2025 were $10.7 million, down from $20.4 million in the prior year [29] - Free cash flow outflow improved to $25.7 million from $106.4 million in the previous year [29] Strategic Outlook - The company has refined its 2025 outlook, expecting constant currency revenue growth to be flat to +1%, down from a previous expectation of +2% to +4% [34] - Adjusted EBITDA is still anticipated to be in the range of positive $5 million to $15 million [34] - Capital expenditures are now expected to be approximately $20 million, reduced from earlier estimates of $30 to $35 million [34]

Core Viewpoint - Oatly Group AB, the world's largest oat drink company, is set to report its financial results for Q2 2025 on July 23, 2025, before the U.S. market opens [1]. Company Overview - Oatly has been focused on oats for over 30 years, developing expertise that has led to advancements in a variety of dairy alternatives, including milk, ice cream, yogurt, cooking creams, spreads, and on-the-go drinks [3]. - The company is headquartered in Malmö, Sweden, and its products are available in more than 50 countries globally [3]. Upcoming Events - A conference call and webcast will be held on July 23, 2025, at 8:00 a.m. ET to discuss the financial results [1][2]. - The webcast will be archived for 30 days for later access [2].

Group 1: Momentum Investing Overview - Momentum investing contrasts with the traditional "buy low and sell high" strategy, focusing instead on "buying high and selling higher" to capitalize on fast-moving stocks [1] - Identifying the right entry point for momentum stocks is challenging, as they may lose momentum if their valuations exceed future growth potential [1] Group 2: Investment Strategy - Investing in bargain stocks that have recently shown price momentum can be a safer approach [2] - The Zacks Momentum Style Score is useful for identifying strong momentum stocks, while the 'Fast-Paced Momentum at a Bargain' screen helps find attractively priced fast-moving stocks [2] Group 3: Oatly Group AB (OTLY) Analysis - Oatly Group AB (OTLY) has shown significant price momentum, with a four-week price change of 26.8% [3] - Over the past 12 weeks, OTLY's stock gained 28%, indicating its ability to deliver positive returns over a longer timeframe [4] - OTLY has a beta of 1.89, suggesting it moves 89% higher than the market in either direction [4] - The stock has a Momentum Score of B, indicating a favorable time to invest [5] - OTLY has a Zacks Rank 2 (Buy) due to upward trends in earnings estimate revisions, which attract more investor interest [6] - The stock is trading at a Price-to-Sales ratio of 0.44, indicating it is relatively cheap at present [6] Group 4: Additional Investment Opportunities - Besides OTLY, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, suggesting further investment opportunities [7] - Zacks offers over 45 Premium Screens tailored to different investing styles, which can help identify potential winning stocks [8]

Group 1 - Oatly Group AB's shares have increased by 9.6% over the past four weeks, closing at $11.47, with a mean price target of $18.37 indicating a potential upside of 60.2% [1] - The mean estimate consists of six short-term price targets with a standard deviation of $11.26, where the lowest estimate is $10.20 (11.1% decline) and the highest is $40 (248.7% increase) [2] - Analysts show strong agreement in revising earnings estimates higher, with a 33.6% increase in the Zacks Consensus Estimate for the current year, indicating positive earnings prospects for Oatly [11][12] Group 2 - Oatly currently holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - The consensus price target, while not entirely reliable, suggests a positive direction for Oatly's stock price movement [10][13] - Analysts' price targets can often be overly optimistic due to business incentives, but a low standard deviation in estimates indicates a high degree of agreement among analysts [8][9]