Oatly(US:OTLY)2025-04-30 11:30Financial Data and Key Metrics Changes - In Q1 2025, the company reported a revenue decline of 0.8% with constant currency revenue growth of 0.7% [28] - Gross margin expanded by 450 basis points year-over-year to 31.6%, marking the best quarterly results since the company went public [28][29] - Adjusted EBITDA loss was €3.7 million, an improvement of €9.5 million compared to the same quarter last year [28][32] Business Line Data and Key Metrics Changes - Volume grew by 9.2% in the quarter, with strong performance in Greater China and solid growth in Europe and International [6][29] - North America segment underperformed due to a change in sourcing strategy at the largest customer and SKU rationalization in frozen items [20][32] - The company continues to outperform both the plant-based milk category and the oat milk category, despite challenges in North America [21][32] Market Data and Key Metrics Changes - The German market saw accelerated growth to nearly 8% in the last twelve weeks, while the UK market is moving from decline to incipient growth [18][19] - The Greater China segment is performing well, with a focus on food service and rebuilding retail presence [23][24] Company Strategy and Development Direction - The company aims for disciplined resource allocation to create value and achieve its first full year of profitable growth as a public company [4][5] - Key priorities include igniting positive momentum globally, pursuing cost efficiencies, and enhancing brand relevance [9][25] - The company plans to roll out its strategy to more European markets and North America in Q2 2025 [26][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges in North America but believes investments and action plans will drive positive momentum later in the year [7][20] - The company expects constant currency growth in the range of 2% to 4% for the full year, with adjusted EBITDA projected between €5 million to €15 million [35][36] Other Important Information - The company reduced its cost of goods sold per liter by 15% year-over-year and 6% compared to the previous quarter [25] - Free cash flow improved to a use of cash of €21 million, marking the best quarterly performance as a public company [34] Q&A Session Summary Question: What gives confidence that initiatives in the U.S. will lift the soft oat milk category? - Management acknowledges that while Europe is outperforming, turning around category momentum in the U.S. will take time, but they see significant distribution opportunities [41][44] Question: How is the company thinking about gross margin for the full year? - Management expects gross margin to improve compared to the previous year, driven by supply chain efficiencies and product mix management [46][48] Question: What are the biggest distribution opportunities in North America? - Management sees ample opportunities across all channels, including retail and food service, and emphasizes the importance of executing the new playbook [53][56] Question: What is the outlook for the U.S. consumer and category momentum? - Management notes that while the category is experiencing a paradigm shift, they believe in the long-term fundamentals supporting growth in plant-based products [59][64] Question: What feedback is being received from food service operators regarding plant-based offerings? - Management observes that small to medium food service customers are adapting quickly to trends and adopting the company's offerings, indicating a shift in consumer preferences [78][81] Question: Are there opportunities for plant-based beverages to gain endorsements from health organizations? - Management confirms that they are actively building alliances and engaging in public education to support the plant-based narrative [84][86]