Oatly Group AB (NASDAQ:OTLY) Q4 2022 Earnings Call Transcript

Daniel Ordonez: Thank you for the question – Daniel here again. I think what you saw is us being silent out there for more than a year, in fact 18 months, so we are coming back. We believe–we trust our playbook as we have seen in Europe in the second half of the year, so we are coming back. That’s what we’re orchestrating. Apologies if it sounds a bit mechanic, but what you will see us is concentrated in execution and resource allocation. Just to name a few examples, we have a lot of distribution to be gotten out of existing doors, new items in existing doors. Imagine we average two items per door at the moment with a range of four. Imagine now with available capacity what we can achieve, and new doors incremental. We’re normally in 70% of the doors in existing customers, so all of that inertia, now with available capacity and brand building is what you’re going to see from quarter two.

We want to remain simple. We are a simple brand and a super attractive brand, and that is what you see in the velocities, which are the highest that possibly can be here in the U.S. but also in Europe.

John Baumgartner: Okay, and then just a follow-up on Asia, volume was pretty good for the quarter, price mix was pretty weak. Can you speak to the price-mix evolution in Asia in 2023, and then as China comes out of these COVID lockdowns, is it fair to think food service still stays about two-thirds of sales there or should we see more of a retail rollout in 2023? Thank you.

Daniel Ordonez: I can start first with the price mix. Essentially that is the result of the COVID-19 restrictions and the impact that has had on the market in China, so we’ve had to use heavier levels of promotions to offload inventory.

Toni Petersson: And just to build on that expansion, yes, as I said in my opening remarks here, our customer base has increased significantly throughout the year. We’re also putting investments behind the branding to position us for the acceleration that is going to happen in China, and yes, we’re going to enter with the new local production we have, new formats, new innovation that we can bring. We can target consumers in a completely different way than we have done before, and that is just a matter of time. So yes, you’re going to see us diversifying to more channels in China.

John Baumgartner: Thank you.

Operator: Our next question is from Rob Dickerson with Jefferies. Please proceed.

Rob Dickerson: Great, thanks so much. I guess just first question in terms of the top line revenue guidance, clearly there’s some pricing in there, so maybe if you could just help us understand maybe the delta between pricing and volume that’s implied in the guide, and then secondly kind of within that, just given the shift, positive momentum hopefully that’s expected to come with the capacity and probably improved culture, I’d assume internally in the Americas, how are you thinking about volume growth potential in ’23 in the Americas? Then I have a quick follow-up, thanks.

Toni Petersson: Sure, I’ll start off with some high level, and then maybe the team, if you guys want to chime in. But we expect constant currency revenue growth in the second half to be stronger than the first half, and in the first half of the year price mix growth will be higher than volume growth as you’ve seen in our prepared remarks that we will have the full impact of the EMEA pricing actions that we executed in December of last year and then January of this year. Then in the second half with the anniversary of the Americas pricing actions and our expansion strategies will be taking hold, which will cause volume growth to outpace price mix in the second half.