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    Oatly Group (OTLY)

    Q3 2024 Earnings Summary

    Reported on Feb 18, 2025 (Before Market Open)
    Pre-Earnings Price$18.59Last close (Nov 6, 2024)
    Post-Earnings Price$17.20Open (Nov 7, 2024)
    Price Change
    $-1.39(-7.48%)

    What went well

    • All three operating segments have turned positive on adjusted EBITDA, indicating improving financial health and progress toward profitability.
    • The company has made significant structural progress, including a significant gross margin increase and SG&A recalibration, positioning it well for future profitability.
    • Management is committed to achieving profitable growth and plans to continue driving distribution gains, market share improvements, and category creation in expansion markets, suggesting potential for future revenue growth.

    What went wrong

    • Guidance implies a slowdown in revenue growth to around 7% in Q4 2024, with the company expecting constant currency revenue growth "near or slightly below the low end" of its prior range of 6% to 10%. This deceleration is driven by "category growth dynamics in Europe, notably the recent category sluggishness in the UK".
    • Management acknowledged uncertainty in achieving positive adjusted EBITDA in 2025, stating they are "not going to give you any 2025 guidance today" and are "still going through our budget process", suggesting possible ongoing profitability challenges.
    • The company is facing sluggish category growth in Europe, particularly in the UK, and is planning to increase advertising and promotional spending to reignite growth, which may impact margins and profitability.

    Q&A Summary

    1. Achieving Positive Adjusted EBITDA
      Q: Can you achieve positive adjusted EBITDA in 2025?
      A: Management reaffirmed their commitment to achieving profitable growth and highlighted significant structural progress, including increases in gross margin and recalibration of SG&A. They expect to continue making progress but are not providing specific 2025 guidance at this time.

    2. Revenue Growth Deceleration
      Q: What is driving the revenue slowdown to 7% in Q4 '24?
      A: The slowdown is attributed to category growth dynamics in Europe, particularly recent sluggishness in the UK. Management is focusing on controllable factors like consumer engagement and advertising to address the issue.

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