Poor Oat Crop Compounds Oatly’s Problems

March 29, 2022
To the problems of oat milk pioneer Oatly AB, add: a hard time finding the basic material.

To the problems of oat milk pioneer Oatly AB, add: a hard time finding the basic material.

Company officials said during a recent earnings call that they are suffering negative impacts from disruptions to America’s oat crop. Oat production declined 39% in 2020 from 2019 due to drought and transportation problems, and prices are now being predicted to reach $4.20 per bushel, which would be a new record.

“We continue to focus on prioritizing growth investments over profitability to increasingly scale our operations to best position Oatly to serve customers and consumers, with the understanding that this creates some near-term margin headwinds,” CEO Toni Petersson said in a statement.

Oatly’s sales increased by 46%, to $185.9 million in the most recent quarter over the same quarter last year, but gross profit was down 16%, to $29.6 million. Gross margins went down for the year to 16%, compared to 28% last year.

The sales increase is attributable in large part to the startup of three new processing facilities, and the decline in profit to the costs associated with them.

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