Oatly (2)

Oatly orecast revenues of $880m to $920m in 2022 - an increase of 37% to 43% - with strong growth across all regions

Losses at plant-based milk brand Oatly have ballooned as costs spiralled, inflation squeezed margins and it ploughed more money into growing production capacity to meet rising demand.

The Swedish group faced a number of problems as it entered the fourth quarter of 2021, struggling with getting its new factory in the US up to speed and a hit to the foodservice operation from ongoing Covid restrictions in Asia.

It also saw costs race higher as a result of investment in its three new facilities, co-packing issues at its Singapore site and soaring inflationary presures on logistics, shipping container prices and “unusually high” energy costs in Europe.

There was also a $1.7m charge for a product recall in Europe and a $1.5m impairment associated with a factory in Sweden, as well as higher R&D costs and general expenses.

It led to a net loss of $79.8m in the final three months of the year, up from $37m in the same quarter of 2020, while overall losses for the year hit $215m - ballooning from $58m in the prior year.

CEO Toni Petersson said Oatly continued to focus on prioritising growth investments over profitability as it seeks to rapidly scale up.

“While we experienced inflationary cost pressures and supply chain challenges in certain areas of our business during the fourth quarter, we continue to believe that by having more localized self-manufacturing production, we can achieve much better production economics and operating efficiencies, reduce our environmental impact, and increase profitability over the next several years,” he added.

Despite its issues, 2021 was a record year for the oat milk drink supplier, with revenue growth of 53% to $643.2m, which the company said beat its expectations, with sales up 46.3% in the fourth quarter to $185.9m.

Fourth-quarter growth in Europe and the Middle East came in at 14.1% to $88.9m as it increased production, while in the Americas sales almost doubled to $55.5m, with Asia up 98% to $41.6m.

The split between retail and foodservice also narrowed in the final three months of 2021 as it expanded the reach into more coffee shops, with the former making up 56.2% of the business, compared with 66.3% a year ago, and the latter rose to 38.3% from 30.1%.

Petersson said: “We have a proven, disciplined and thoughtful multi-channel strategy for growth that we believe sets us apart from the competition based on our success thus far in building our brand across three continents with a significant amount of whitespace to add new markets.”

Oatly forecast revenues of $880m to $920m in 2022 - an increase of 37% to 43% - with strong growth across all regions.

“We are energized to execute on the many untapped future opportunities for new distribution, innovation and new market development as we look to make Oatly a natural part of people’s lives,” Petersson added.

“In 2022, our global team continues to focus on the controllable aspects of our business while navigating a challenging operating environment that we believe will include Covid restrictions and lockdowns in certain countries, risk of Covid-related absenteeism in our production facilities, significant supply chain delays and disruptions, and increased inflationary pressures.”

Oatly shares are down 3% to $5.58 today as US markets opened. It is way down from the high of $28.73 in June following May’s blockbuster $10bn IPO.