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    Oatly Group (OTLY)

    OTLY Q2 2025: Greater China Carve-Out Review to Unlock Value

    Reported on Jul 23, 2025 (Before Market Open)
    Pre-Earnings Price$15.23Last close (Jul 22, 2025)
    Post-Earnings Price$14.38Open (Jul 23, 2025)
    Price Change
    $-0.85(-5.58%)
    • Unlocking Growth in Greater China: The strategic review of its Greater China business, including potential carve-out options, indicates management’s focus on unlocking value and accelerating future growth.
    • North America Upside with Proven Strategies: Despite headwinds, management’s confidence in deploying its successful European growth playbook in North America suggests significant potential for recovery and market share gains.
    • Discipline in Cost Management: The emphasis on additional corporate SG&A savings and cost-efficient initiatives supports margin improvement and healthier adjusted EBITDA, reinforcing a stronger financial outlook.
    • Greater China Uncertainty: The management initiated a strategic review of its Greater China business, considering options like a potential carve-out. This uncertainty over strategic outcomes could unsettle investors and affect overall business cohesion.
    • North American Underperformance: Management acknowledged that North American results were below expectations, with significant challenges such as customer sourcing shifts and SKU rationalization affecting performance. This underperformance raises concerns about sustainable growth in a key market.
    • Category and Consumer Challenges: Concerns were raised about declining penetration and the challenges of changing consumer behavior, particularly around taste and protein perceptions, which might limit long-term volume growth despite innovation efforts.
    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Constant Currency Revenue Growth

    FY 2025

    2% to 4%

    approximately flat to +1%

    lowered

    Adjusted EBITDA

    FY 2025

    positive $5 million to $50 million

    reaffirmed guidance in the range of $5 million to $15 million

    lowered

    CapEx

    FY 2025

    $30 million to $35 million

    approximately $20 million

    lowered

    Economic and Consumer Conditions

    FY 2025

    Assumes that current economic conditions and consumer behaviors remain largely consistent for FY 2025

    Assumes that current economic conditions and consumer behavior will remain largely consistent for the rest of the year

    no change

    Foreign Exchange Impact

    FY 2025

    no prior guidance

    Estimated to be an approximately 150 basis point tailwind for the full year

    no prior guidance

    Gross Profit Dollars

    FY 2025

    no prior guidance

    Expected to improve in the second half of the year compared to the first half

    no prior guidance

    SG&A Savings

    FY 2025

    no prior guidance

    Additional savings identified, primarily from corporate expenses, with impacts starting in Q3 and growing into Q4

    no prior guidance

    TopicPrevious MentionsCurrent PeriodTrend

    Greater China Strategic Review & Potential Carve-Out

    Not mentioned in Q1 2025, Q4 2024, or Q3 2024

    In Q2 2025, Oatly introduced a strategic review and potential carve-out for its Greater China business, aiming to accelerate growth and maximize value

    New topic emerged

    North American Market Performance & Execution

    Consistently discussed in Q1 2025, Q4 2024, and Q3 2024 – highlighting growth in segments, significant revenue improvements, and challenges like sourcing strategy shifts; Q1 noted headwinds and incremental opportunities

    In Q2 2025, the discussion continued with mixed signals: lower-than-expected results compounded by sourcing headwinds and SKU issues, yet record quarterly retail sales and strong foodservice performance were reported

    Consistent focus with mixed sentiment; challenges persist but with record sales highlights

    Cost Management & Margin Improvement Strategies

    Q1 2025, Q4 2024, and Q3 2024 outlined robust efforts: aggressive cost efficiencies, SG&A reductions, supply chain optimizations and significant margin expansions through production footprint reviews and improved input sourcing

    Q2 2025 maintained the focus with continued cost reductions (e.g., 10% reduction in cost per liter), SG&A savings, and a 330 basis point gross margin expansion driven by supply chain and pricing mix benefits

    Consistently positive – emphasis on efficiency and improved margins remains strong

    Distribution Expansion & Market Share Growth Initiatives

    Discussed across Q1 2025, Q4 2024, and Q3 2024. Previous calls emphasized expansion in channels, market share gains, success in retail and foodservice, and innovative product launches driving consumer adoption

    Q2 2025 highlighted strong double-digit revenue growth in Europe and International markets, continued expansion into new distribution channels (including a playbook rollout in North America), and solid growth figures like 40% YOY in expansion markets

    Consistent growth strategy; continued expansion with favorable market reception and playbook rollout

    Consumer Behavior & Category Dynamics

    Q1 2025 emphasized significant potential (e.g., 82% U.S. consumers yet to try oat milk) and noted category softness; Q4 2024 detailed sluggish category growth, taste misperceptions, and misinformation challenges; Q3 2024 focused on consumer engagement and overcoming reluctance through targeted marketing

    Q2 2025 discussed a soft North American consumer environment similar to past challenges, while noting that Europe’s improvement offers a replicable model; taste remains the primary barrier but strategies are in place to overcome it, and strong foodservice performance in Greater China helps offset the weakness in retail

    Recurring focus with persistent barriers yet gradual optimism drawn from European success

    Customer Sourcing & SKU Rationalization Challenges

    Q1 2025 detailed sourcing shifts at a major North American foodservice customer and SKU rationalization in the frozen portfolio; Q4 2024 also addressed sourcing changes and product mix optimization efforts. Q3 2024 did not mention these challenges

    Q2 2025 continued to report issues with a major customer’s sourcing strategy and further challenges from SKU rationalization in the frozen product line, directly impacting North American performance

    A recurring challenge that continues to impact revenue growth and operational execution

    Pricing, Mix Pressures & Revenue Growth Guidance Uncertainty

    Q1 2025 noted an 8.5% decline in price/mix along with a 1.5% FX headwind, while Q4 2024’s discussion included the impact of a large customer sourcing change resulting in a 300 basis point headwind; Q3 2024 mentioned mix improvements and a refined revenue outlook with controlled pressures

    In Q2 2025, Oatly reported a 3% decline in price mix, adjustments in guidance (constant currency revenue expected to be flat to +1%), combined with FX factors affecting full-year outlook; challenges remain while attempting to mitigate mix pressures by reallocating product focus

    Consistently under pressure; revenue outlook uncertainty persists with slight adjustments in guidance

    1. China Review
      Q: Why review Greater China now?
      A: Management believes the Greater China business is now leaner and stronger after recent resets, making it an ideal time to explore options—including a potential carve out—to unlock shareholder value.

    2. North America Turnaround
      Q: Why is North America flat and next plan?
      A: They noted that North America’s flat performance stems from sourcing shifts and customer issues, and they plan to deploy the proven growth playbook from Europe to boost distribution and consumer engagement.

    3. Category Challenges
      Q: Is protein content harming US demand?
      A: Management emphasized that while protein is a value topic, oat milk penetration remains steady and taste remains the key hurdle, so they will focus on taste innovation to drive demand.

    4. Cost Savings
      Q: Where will SG&A savings come from?
      A: They detailed that incremental SG&A savings will mostly come from corporate-driven initiatives like centralizing contracts and professional contract negotiations, ensuring efficiency without sacrificing growth.

    Research analysts covering Oatly Group.