Oatly is planning to slash its employee headcount as part of a package of cost-cutting measures, as losses continued to spiral and the plant-based milk alternative once again downgraded its growth expectations for the year.
It did not specify in its third-quarter trading update how many of its more than 1,300 staff would be affected by the move, but it said an overhead and headcount reduction would impact up to 25% of costs related to group corporate functions and “regional EMEA layers”.
The group expected annual savings from the restructure of up to $25m (£21.3m) a year starting in the first quarter of 2023.
CEO Toni Petersson said the moves to simplify the group and execute a supply chain network expansion would drive “more profitable growth going forward with a more asset-light strategy”.
A group spokesman told The Grocer, Oatly was still in talks with unions and couldn’t put a number on the amount of employees involved.
“We are currently in discussions with unions and are working diligently to minimise the total impact,” he said. “We are unable to disclose any specific numbers on proposed redundancies until our consultations with the unions are complete. Any personnel changes like these are difficult and we are committed to treating all departing employees with respect and empathy.”
It comes as revenues in the third quarter came in below company and analyst expectations at $183m (£155.9m) as a result of ongoing Covid restrictions in China, production issues in the Americas and currency headwinds from the strong US dollar.
Losses also ballooned by more than expected, with an EBITDA loss for the quarter of $92.2m, compared with a $36.5m loss a year ago, while the net loss totalled $107.9m, up from $41.2m in Q3 of 2021. An $18.7m increase in general and admin expenses to $103.8m contributed to the loss and was driven by higher employee costs as Oatly expanded its headcount significantly in recent years.
Oatly also downgraded its full-year outlook once again following a significant downward revision in the second quarter.
It now expects revenues of $700m to $720m for the year, down from a forecast of $800m to $830m made in August, which itself was significantly lower than the $880m to $920m forecast flagged in April.
“We believe these challenges are transitory and that we have significant opportunities for growth as these headwinds subside,” Petersson said.
“In the meantime, we have taken actions to adjust our supply chain network strategy and simplify our organisational structure for a more balanced growth equation moving forward.”
Oatly set out a supply chain network strategy centred on focusing investments on its proprietary oat-base technology and capacity, which it expected to reduce the capital intensity of future facilities and have a positive effect on cashflow outlook.
The company is also actively pursuing manufacturing partners to create “a more hybrid production network across select geographies”.
Oatly’s shares collapsed by more than 19% to a new all-time low of $1.98 as markets opened in the US this afternoon. The embattled stock is now down more than 76% this year following a string of disasterous trading updates.
The group is now valued at just more than £1bn, way down from the $10bn IPO market cap in May 2021 and a long way off highs of $29 a share before the collapse in investor confidence.
“We continue to see strong velocities, year-on-year sales volume growth, and minimal price elasticity globally, which we believe demonstrates the power and resilience of the brand,” Petersson said.
“To position Oatly for our next phase of growth, we have taken decisive and strategic actions to improve our operational efficiencies in a volatile macroeconomic environment with an even more focused allocation of resources and capital. These initial actions will simplify our organisational structures and the execution of our supply chain network expansion, and we expect more profitable growth going forward with a more asset-light strategy.”
Revenues in the third quarter increased 7% year on year, with sales in EMEA falling 5.5% to $82.6m.
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