Oatly's Q4 2024: Navigating Contradictions in Margins, Marketing, and U.S. Sales Strategy

These are the key contradictions discussed in Oatly Group AB's latest 2024Q4 earnings call, specifically including: Gross Margin Improvement Strategy, Marketing Approach Adjustments, Expectations for 2025 Profitability, and U.S. Sales Strategy:



Revenue and Growth Performance:
- Oatly Group AB reported 4.8% constant currency revenue growth for 2024, which was below guidance, despite 8.8% volume growth.
- Despite the slight revenue miss, adjusted EBITDA was at the favorable end of guidance, highlighting the company's improved profitability.
- The reason for the revenue shortfall was attributed to sluggish category growth, while the strong EBITDA performance reflects operational efficiency improvements.

Supply Chain and Cost Efficiency:
- Oatly's supply chain was simplified with the closure of the Singapore plant and discontinuation of the second Chinese facility, resulting in five manufacturing plants globally.
- The company achieved 99% customer fill rates in 2024 and reduced its cost per liter by 19% over the past two years.
- These changes were part of a strategic effort to enhance supply chain efficiency and lower costs, contributing significantly to profitability.

Marketing and Market Penetration:
- Oatly's marketing approach was augmented to focus on relevant and integrated brand activation, aiming to increase household penetration and consumer conversion.
- The company is focused on breaking down taste and misinformation barriers in plant-based milk adoption.
- This strategic shift aims to capitalize on the potential for oatmilk to reach 70-80% of the category's penetration, supported by successful campaign results in Germany.

Profitability and Financial Outlook:
- For 2025, Oatly expects constant currency revenue growth of 2% to 4% and adjusted EBITDA in the range of $5 million to $15 million.
- The main drivers of profitability are expected to be gross margin expansion, efficiencies in supply chain and SG&A, and additional distribution gains.
- The change in sourcing decisions by the largest U.S. customer is expected to impact growth by approximately 300 basis points.