SWEDEN – Oatly, a Swedish oat-based drinks maker, has reported a substantial impairment charge related to its decision to abandon the construction of three manufacturing plants.

The company, aiming to reach profitability in fiscal 2024 under its “asset-light strategy,” opted to discontinue the plans for additional sites in Peterborough (UK), Fort Worth (US), and China.

In the fourth quarter of 2023, Oatly incurred a non-cash impairment charge of US$172.6 million and additional costs of US$29 million related to the discontinued construction of these production facilities.

These charges contributed to operating and income expenses, which rose to US$204.3 million from US$41.1 million in the previous year.

The company noted the possibility of incurring additional costs associated with the discontinuation of construction at these facilities.

Despite the impairment charge, Oatly reported a 4.6% increase in revenue for the quarter, reaching US$204.1 million, with volumes up by 2% and a positive 0.5% in price/mix.

The gross margin increased by 750 basis points to 23.4%. However, EBITDA losses widened to US$228 million from US$111.2 million a year earlier. Adjusted EBITDA losses shrank to US$19.2 million from US$60.4 million.

For the full year 2023, reported revenue rose by 8.5% to US$783.4 million, with volumes up by 3.1% and a price/mix increase of 5.6%.

The EBITDA loss widened to $405.2 million compared to US$347.4 million in fiscal 2022. Adjusted EBITDA losses narrowed to US$157.5 million from US$267.9 million.

Losses before tax remained in the red at US$408.2 million, compared to a US$397.3 million loss in the previous fiscal year.

Oatly’s shares on the Nasdaq exchange were down nearly 15% at US$1.15 following the announcement.

Looking ahead to fiscal 2024, Oatly provided sales revenue growth guidance of 5% to 10%, and adjusted EBITDA losses in the range of US$35 to US$60 million.

The company also reported improved free cash flow, with a US$234.7 million outflow for the year ending 31 December, compared to a US$475.1 million outflow in the previous 12 months.

The improvement in free cash flow was attributed to decreased net cash flows used in operating activities and lower capital expenditures.

 

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