OTLY Stock Gains 11% Despite Reporting Wider-Than-Expected Loss

Oatly Group AB OTLY posted fourth-quarter 2025 results, wherein both the top and bottom lines increased year over year. The top line surpassed the Zacks Consensus Estimate, while the bottom line missed the same.

Oatly’s fourth-quarter results indicate that the company is moving into a new phase of its turnaround, with early signs that the actions taken over the past several years are translating into more consistent and sustainable performance. 

While challenges remain in certain markets, management highlighted improving momentum where the refreshed growth playbook has been fully implemented, supported by supply-chain efficiencies, tighter cost control and more focused investment behind the core beverage portfolio. Reflecting this shift in sentiment, OLTY shares gained 10.7% yesterday, suggesting growing investor confidence in the company’s trajectory.

More on Oatly’s Q4 Results

This oat drink company posted a quarterly loss of 61 cents per share in the quarter under review. The reported figure was wider than the Zacks Consensus Estimate of a loss of 54 cents. However, the bottom line improved significantly from the loss of $3.05 incurred in the year-earlier quarter. 

Total revenues of $233.8 million surpassed the Zacks Consensus Estimate of $217 million and increased 9.1% year over year on a reported basis and 4.3% on a constant-currency basis. Constant-currency growth reflected another quarter of steady performance in Europe & International, partly offset by a decline in North America due to reduced sales to a large foodservice customer, as well as a slight decrease in Greater China.

Sold volume rose 2.9% to 157.6 million liters from 153.2 million liters in the fourth quarter of 2024. Produced finished goods volume increased to 161.5 million liters from 145.3 million liters in the prior-year quarter.

OTLY’s Margin & Cost Details

Gross profit improved 31.1% year over year to $80.8 million and the gross margin expanded 579 basis points year over year to 34.5%. The margin improvement was driven by supply-chain efficiencies in Europe & International, and favorable product and channel mix in North America and Greater China.

Research and development expenses increased 35.5% year over year to $5.1 million, primarily reflecting costs associated with product launches and foreign currency exchange headwinds. Selling, general and administrative expenses rose 2.3% to $83.9 million. The increase was mainly due to foreign currency exchange headwinds and higher customer distribution costs tied to increased sold volumes, partially offset by ongoing efforts to lower overhead.

Adjusted EBITDA for the fourth quarter of 2025 was $11 million against a loss of $6.1 million in the prior-year period. The year-over-year improvement was primarily driven by higher gross profit.

OTLY’s Q4 Revenue Insights by Regions

Europe & International revenues increased 23.3% year over year to $133.7 million in the fourth quarter of 2025, which beat the Zacks Consensus Estimate of $123.6 million. Excluding a $9.9-million foreign currency exchange tailwind, revenues were $123.9 million, representing growth of 14.2%. The increase was primarily driven by volume growth of 13.9%, led mainly by Barista products. Approximately 79% of Europe & International revenues came from the retail channel in the fourth quarter compared with 81% in the prior year. The sold finished goods volume for the three months ended Dec. 31, 2025, and 2024 totaled 89.3 million liters and 78.3 million liters, respectively.

Adjusted EBITDA increased by $9.9 million to $26.5 million. The improvement was primarily driven by higher gross profit resulting from increased revenues and continued supply-chain productivity.

North America revenues decreased 8.8% year over year to $64.4 million, which lagged the Zacks Consensus Estimate of $65.1 million. The sold finished goods volume decreased 12.6% to 35.8 million liters due to reduced sales to the segment’s largest foodservice customer. Retail represented approximately 61% of North America revenues in the quarter compared with 48% in the prior-year period.

Adjusted EBITDA increased by $3.1 million year over year to $4.4 million. The improvement was driven by higher gross profit, largely reflecting favorable channel and product mix, and improved supply-chain performance, which more than offset lower fixed cost absorption associated with reduced volumes.

OTLY Stock Past 3-Month Performance

Greater China revenues increased 1.1% year over year to $35.7 million, which surpassed the Zacks Consensus Estimate of $28.6 million. Excluding a $0.4-million foreign currency exchange tailwind, revenues were $35.2 million, representing a slight decrease of 0.1%.

The modest decline on a constant-currency basis was primarily due to reduced foodservice sales, partially offset by growth in the retail channel. Foodservice accounted for approximately 66% of segment revenues compared with 76% in the prior-year period. The sold finished goods volume declined to 32.5 million liters from 33.8 million liters.

Adjusted EBITDA increased by $0.5 million to $1.1 million. The improvement was driven by higher gross profit, reflecting a favorable channel and product mix.

Oatly’s Financial Health Snapshot

The company ended the quarter with cash and cash equivalents of $64.3 million, and total outstanding debt of $523 million, consisting of Nordic Bonds, Convertible Notes and liabilities to credit institutions. Net cash used in operating activities was $23.7 million for the 12 months of 2025.

Capital expenditure totaled $15.3 million for the 12 months ended Dec. 31, 2025, compared with $41.2 million in the prior year. The decrease reflects the company’s continued investment discipline, as well as certain projects originally expected to be completed in 2025 that are now anticipated to be completed in 2026.

The free cash flow was an outflow of $39 million for the 12 months ended Dec. 31, 2025, compared with an outflow of $155.6 million in the prior-year period. The improvement was driven by lower cash used in operating activities and reduced capital expenditure.

Other Developments

The company continues to conduct a strategic review of its Greater China business. While there is no definitive timetable for completion, the company currently expects the review to conclude by 2026.

Sneak Peek Into OTLY’s 2026 Outlook

The company’s outlook continues to include the expected results of the Greater China segment. Based on its assessment of the current operating environment and the actions underway, the company is providing the following outlook for 2026.

Constant-currency revenue growth is expected to be 3-5%, including an anticipated headwind of 200 basis points related to a large foodservice customer in the North America segment. Based on recent foreign exchange rates, foreign currency is expected to provide a full-year revenue growth tailwind of 100-200 basis points.

Adjusted EBITDA is expected to be $25-$35 million. Capital expenditure is expected between $20 million and $30 million.

Shares of this Zacks Rank #3 (Hold) company have lost 3.9% in the past three months as compared with the industry’s decline of 3%.

Key Picks

We have highlighted three better-ranked stocks, namely Hershey Company HSY, The Simply Good Foods Company SMPL and Medifast MED.

Hershey manufactures pantry items like baking ingredients, toppings and beverages; gum and mint refreshment products; and snack bites and mixes, as well as spreads. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hershey’s current financial-year earnings and revenues implies growth of 27.1% and 4.4%, respectively, from the year-ago actuals. HSY delivered a trailing four-quarter average earnings surprise of 17.2%.

Simply Good Foods’ product portfolio consists primarily of nutrition bars, ready-to-drink shakes, snacks and confectionery products. It currently has a Zacks Rank of 2 (Buy).

SMPL delivered a trailing four-quarter earnings surprise of 5.5%, on average. The consensus estimate for Simply Good Foods’ current fiscal-year sales and earnings indicates a decline of 0.3% and growth of 1.6%, respectively, from the year-ago period’s reported figures.

Medifast is a leading manufacturer and distributor of clinically-proven healthy living products and programs. It has a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for Medifast’s current financial-year earnings and revenues implies declines of 156.5% and 36.7%, respectively, from the year-ago actuals. MED delivered a negative trailing four-quarter average earnings surprise of 640%.

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This article originally published on Zacks Investment Research (zacks.com).

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