What happened
Shares of Oatly (OTLY 1.48%) fell 20.8% on Monday after the plant-based foods company cut its full-year sales forecast.
So what
Oatly's revenue surged 49.2% year over year to $171.1 million in the third quarter. The provider of dairy alternatives was able to increase its produced finished goods volume by 77% to 131 million liters after boosting capacity at its facility in Vlissingen, Netherlands. Restaurant and retail store reopenings following the easing of coronavirus-related restrictions also contributed to the revenue gains.
"The robust third-quarter revenue increase reflects broad-based growth across geographies and sales channels," CEO Toni Petersson said in a press release. "We're pleased with our ability to continue to be a leader in driving growth and sales velocity for the plant-based milk category within our key markets."
Wall Street, however, was expecting even stronger growth. Analysts had forecast revenue of nearly $186 million.
Investors sold off Oatly's shares on Monday. Image source: Getty Images.
Moreover, higher production and shipping costs weighed on Oatly's profit margins. Its gross margin declined to 26.2%, down from 31.3% in the third quarter of 2020. Its net loss, in turn, expanded to $41.2 million, compared to a loss of $10.4 million in the year-ago quarter.
Now what
Ongoing production and distribution challenges related to COVID-19 prompted Oatly to cut its full-year revenue outlook. Management now expects the company to generate revenue of more than $635 million, compared to its prior projection of $690 million.
Still, Petersson views these difficulties as transitory -- and he believes Oatly has long runways for growth still ahead.
"Despite these temporary headwinds, we are continuing to drive conversion from dairy to the plant-based milk category supporting our mission toward a more sustainable food system," Petersson said. "As we scale our global operations, we may experience certain variability in our strong growth rates quarter-to-quarter, yet our confidence in the category opportunity and long-term trends and trajectory of our business have never been stronger."
