Oatly(US:OTLY)2025-02-12 14:00Financial Data and Key Metrics Changes - The company reported a 5.1% revenue growth for the full year, with constant currency revenue growth of 4.8%, slightly below guidance due to sluggish category growth [34] - Adjusted EBITDA for the fourth quarter was a loss of CHF 6.1 million, and for the full year, it was a loss of CHF 35.3 million, which was at the favorable end of the guidance range [34][35] - Gross margin expanded by 9.3 percentage points year-over-year, reaching 28.7% for the full year [34][70] Business Line Data and Key Metrics Changes - Each of the three operating segments reported profitable growth for the second consecutive quarter, with solid volume growth in both the fourth quarter and full year [37] - The Barista portfolio remains the largest business and growth driver, with North America reporting 10% growth and Europe and International reporting 13% growth in 2024 [15][18] Market Data and Key Metrics Changes - North America experienced double-digit revenue growth in retail and 8% growth in foodservice, with foodservice sales growing by 22% when excluding the largest customer [16][19] - Greater China posted strong double-digit growth in the second half of the year after a strategic reset, driven by an expanded presence in the foodservice channel [16][87] Company Strategy and Development Direction - The company aims to ignite category momentum by increasing relevance and attacking barriers to conversion from dairy, while also driving efficiencies [13][14] - A focus on supply chain simplification has been emphasized, with the closure of the Singapore facility and discontinuation of a second Chinese facility, maintaining five global manufacturing plants [9][30] Management's Comments on Operating Environment and Future Outlook - Management expects to enter a profitable growth era in 2025, with constant currency revenue growth projected between 2% to 4% [7][41] - The company anticipates a 300 basis point headwind to growth from sourcing changes at its largest U.S. customer, but underlying growth remains healthy [7][41] Other Important Information - The company achieved a 99% customer fill rate in 2024, indicating improved operational efficiency [9] - Free cash flow improved significantly, with a $156 million use of cash for the year, marking the best performance since the IPO [39] Q&A Session Summary Question: What are the drivers within gross margin improvement? - Management highlighted optimizing production footprint, maximizing global sourcing resources, and managing product mix as key drivers for gross margin improvement [50][51] Question: What is the outlook for promotional activity in the U.S.? - Management acknowledged recent volatility in promotional activity but emphasized solid consistent velocities in core portfolio products and expected steady growth trajectory [52][55] Question: What is the risk associated with the largest customer in the U.S.? - Management noted that the largest customer represents only 20% of U.S. sales and 7% of total company sales, indicating a reduced exposure and ongoing efforts to drive growth outside this customer [58][83] Question: How has the outlook for the Chinese market changed? - Management confirmed that the business in Greater China is showing positive trends, with profitable growth reported since Q3 2024, and plans to enter the club channel in 2025 [86][87] Question: How confident is the company in achieving the low end of EBITDA guidance for 2025? - Management expressed confidence in the plans being fully resourced and emphasized a disciplined approach to cost and capital allocation to achieve the guidance [92][96]