20-F: Oatly Narrows Losses, Achieves Positive Adjusted EBITDA in 2025

Oatly Group AB reported a significant reduction in net losses and achieved positive adjusted EBITDA in 2025, driven by revenue growth and supply chain efficiencies.

Summary

• Revenue increased by 4.7% to $862.5 million in 2025, from $823.7 million in 2024.
• Excluding foreign currency exchange tailwind of $21.0 million, revenue growth was 2.2% on a constant currency basis.
• Sold finished goods volume increased by 5.3% to 593.1 million liters in 2025.
• Gross profit rose by 17.2% to $277.1 million, with gross margin improving by 3.4 percentage points to 32.1% in 2025.
• Operating loss significantly decreased to $67.7 million in 2025 from $186.2 million in 2024.
• Net loss for the year was $153.1 million in 2025, a reduction from $202.3 million in 2024.
• Adjusted EBITDA turned positive at $6.8 million in 2025, compared to a negative $35.3 million in 2024.
• Research and development expenses decreased by 38.4% to $18.6 million in 2025.
• Selling, general and administrative expenses decreased by 1.3% to $320.6 million in 2025.
• Net cash flows used in operating activities improved by $90.7 million to $23.7 million in 2025.
• The company initiated a strategic review of its Greater China business to explore options including a potential carve-out.
• The company closed its Singapore manufacturing facility and discontinued construction of a second production facility in China in 2024, incurring impairment charges and exit costs.
• The number of employees decreased by 94 to 1,388 as of December 31, 2025, due to strategic actions and restructuring.
• Oatmilk accounted for approximately 90% of total revenue in both 2025 and 2024.
• The retail channel's revenue contribution increased to 65.1% in 2025 from 61.2% in 2024, while foodservice decreased to 32.8% from 35.1%.
• A single external customer in the foodservice channel accounted for approximately 6% of total revenue in 2025, down from 10% in 2024.
• The company issued SEK 1,700 million ($180.9 million) in Nordic Bonds and entered into a SEK 750 million ($79.8 million) super senior revolving credit facility (SSRCF) in September 2025.
• The TLB Credit Agreement was prepaid in full, and $42.9 million of U.S. Notes were repurchased and cancelled in October 2025.
• Material weaknesses in internal control over financial reporting identified in 2024 were remediated as of December 31, 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as moderately positive, reflecting significant operational improvements leading to positive Adjusted EBITDA and reduced net losses, alongside strategic capital restructuring. However, continued net losses and ongoing challenges in certain markets temper the overall sentiment.

Positives

• Achieved positive Adjusted EBITDA of $6.8 million in 2025, a significant improvement from a negative $35.3 million in 2024.
• Net loss for the year decreased by $49.2 million, indicating improved financial performance.
• Gross margin improved by 3.4 percentage points to 32.1% in 2025, driven by supply chain efficiencies.
• Revenue grew by 4.7% year-over-year, demonstrating continued demand for products.
• Research and development expenses decreased by 38.4%, reflecting cost management.
• Selling, general and administrative expenses decreased by 1.3%, indicating successful cost restructuring activities.
• Net cash flows used in operating activities improved significantly by $90.7 million.
• Successfully remediated previously identified material weaknesses in internal control over financial reporting.

Negatives

• Continued to report a net loss of $153.1 million in 2025, despite improvements.
• Finance expenses increased significantly by $64.8 million to $77.2 million in 2025, primarily due to decreased fair value gains on Convertible Notes and increased transaction costs.
• North America segment experienced a reduction in volumes, driven by sourcing decisions of its largest foodservice customer.
• Customer distribution costs increased by $6.0 million and as a percentage of revenue from 6.2% to 6.6%.
• Cash and cash equivalents decreased to $64.3 million in 2025 from $98.9 million in 2024.
• Incurred $7.5 million in costs for the strategic review of the Greater China segment in 2025.
• Incurred $10.6 million in cash outflows related to the closure of the Singapore production facility in 2025.

Risks

• History of losses and potential inability to achieve or sustain profitability, exacerbated by elevated inflation and increased costs for transportation, energy, and materials.
• Reduced or limited availability of high-quality oats and other raw materials from a limited number of suppliers, affecting supply and pricing.
• Failure to obtain necessary capital on acceptable terms may force delays, reductions, or termination of product manufacturing, development, and other operations.
• Damage or disruption at production facilities could significantly disrupt product delivery and business operations.
• Harm to brand or reputation due to real or perceived quality, food safety, nutrition, or sustainability issues with products.
• Food safety and food-borne illness incidents, including product recalls, could lead to lawsuits, regulatory actions, increased costs, and reduced demand.
• Failure by suppliers or co-manufacturers to comply with laws, regulations, or product specifications may disrupt supply and adversely affect business.
• Inability to compete successfully in highly competitive markets against conventional dairy and other plant-based alternatives, many with greater resources.
• Consolidation of customers or loss of a significant customer could negatively impact sales and profitability.
• Heavy reliance on oatmilk varieties for revenue, making the business vulnerable to factors adversely affecting these sales.
• Reliance on co-manufacturing partners, where strategic partnerships may not be successful, affecting operations and manufacturing strategy.
• Failure by logistics providers to deliver products on time could result in lost sales.
• Inability to successfully ramp up operations at company or co-manufacturer facilities, or facilities not operating as expected.
• Failure to effectively expand processing, manufacturing, and production capacity could harm business and brand reputation.
• Failure to develop and maintain the brand, including potential negative publicity or legal challenges to marketing campaigns.
• Failure to develop or introduce new products or successfully improve existing products may adversely affect growth.
• Inability to cost-effectively acquire new customers or retain existing ones, or failure to derive consistent revenue from existing customers.
• Consumer preferences for products are difficult to predict and may change, impacting business if unable to respond quickly.
• Failure to manage future growth effectively, including workforce maintenance, could materially adversely affect business.
• Impairment charges for long-lived assets and other exit costs in connection with production facilities may recur.
• Risks related to sustainability (environmental, climate change, corporate social responsibility) may lead to lawsuits, regulatory actions, and reputational harm.
• Reliance on information technology systems, with inadequacy, failure, interruption, or cybersecurity incidents potentially harming reputation and operations.
• Cybersecurity incidents or other technology disruptions could negatively impact business and customer relationships.
• Risks associated with the adoption of artificial intelligence and other machine learning technologies.
• Customer agreements do not require long-term commitments, potentially impacting sales and financial condition.
• Difficulties expanding operations into countries with no prior operating experience.
• Strategic review of the Greater China business may be unsuccessful, leading to talent attrition, information leaks, or loss of confidence from stakeholders.
• Operations in China expose the company to substantial business, regulatory, political, financial, and economic risks.
• International operations expose the company to global economic and geopolitical risks, including trade tensions and conflicts.
• Failure to comply with trade compliance and economic sanctions laws could materially adversely affect reputation and results of operations.
• Increase in market interest rates will increase future interest payments due to floating interest rate components in debt agreements.
• International operations expose the company to the risk of fluctuations in currency exchange rates.
• Cash and cash equivalents maintained at financial institutions often exceed insured limits, posing a risk of loss of deposits.
• Volatile packaging costs may rise significantly, negatively impacting profitability.
• Fluctuations in results of operations may have a disproportionate effect on overall financial condition.
• Litigation or legal proceedings could expose the company to significant liabilities or costs and negatively impact reputation or business.
• Estimates of market opportunity and forecasts of market growth may be inaccurate, and business may fail to grow at similar rates.
• Failure to retain senior management or attract, train, and retain qualified employees may adversely affect operations.
• Inability to maintain company culture or mission as the company grows may harm success and competitive position.
• Insurance may not provide adequate coverage or may become unavailable at reasonable cost.
• Disruptions in the worldwide economy, including macroeconomic conditions like rising inflation and interest rates, may adversely affect business.
• Legal claims, government investigations, or regulatory enforcement actions could subject the company to civil and criminal penalties.
• Operations are subject to U.S., EU, China, and other laws and regulations, with no assurance of compliance.
• Changes in existing laws or regulations, or adoption of new ones, may increase costs and adversely affect business.
• Stringent environmental regulation and potential environmental litigation, proceedings, and investigations.
• Inability to adequately protect, enforce, or defend intellectual property and other proprietary rights, impacting commercial success.
• Material weaknesses in internal controls, if identified again, could prevent accurate financial reporting, fraud prevention, or timely filing.
• Largest shareholder has significant influence over decisions requiring shareholder approval.
• Volatility in results of operations and market price of ADSs, leading to potential loss of investment.
• Exemption from certain Nasdaq corporate governance standards as a foreign private issuer may provide less protection to shareholders.
• Potential loss of foreign private issuer status or changes in SEC rules could result in significant additional costs.
• Limited choice of forum for ADS or ordinary share holders, potentially limiting ability to obtain favorable judicial forum.
• Securities litigation is expensive and could divert management attention.
• Significant portion of total issued ADSs eligible for sale could cause market price to drop.
• No anticipated dividends on ADSs, making return dependent on price appreciation.
• Shareholders may face difficulties protecting interests as a Swedish company.
• Difficulties in enforcing foreign judgments against the company, directors, or management.
• Oatly Group AB is a holding company dependent on subsidiaries for cash.
• Classification as a passive foreign investment company (PFIC) could lead to material adverse tax consequences for U.S. holders.
• United States persons owning at least 10% of shares may be subject to adverse U.S. federal income tax consequences.
• Changes in tax rates or exposure to additional tax liabilities could affect profitability.
• Substantial indebtedness may decrease business flexibility, access to capital, and/or increase borrowing costs.
• Inability to generate sufficient cash flows to service outstanding debt and fund operations may force other actions.
• Covenants in debt agreements may restrict operating activities and adversely affect financial condition.
• Fundamental change provisions of Convertible Notes may delay or prevent beneficial asset disposition or takeover attempt.
• Transactions relating to Convertible Notes may dilute ownership interests and adversely impact value of securities.
• Potential arbitrage or hedging strategies by purchasers of Convertible Notes may affect value of ordinary shares and conversion price.
• Inability to assure a sustained active or liquid market for ADSs, leading to volatility.
• Cessation of research or adverse changes in recommendations by securities or industry analysts could cause ADS price and trading volume to decline.
• Increased costs and management time devoted to compliance initiatives and corporate governance practices as a public company.

Future Outlook

The company expects capital expenditures for 2026 to be in the range of $20 million to $30 million, primarily for investments in existing production facilities. The strategic review of the Greater China business is expected to be completed within 2026. The company anticipates additional seasonality effects, especially within the food retail channel, linked to holiday periods.

Management Comments

• Management continues to execute on strategic priorities focused on driving profitable growth, setting clear priorities for teams, reducing complexity to increase organizational agility, and executing an asset-light supply chain strategy.
• The company maintains a global focus on controllable aspects of the business while navigating the challenging operating environment.
• Management believes current cash and cash equivalents are sufficient to fund the current business plan for at least the next 12 months.

Industry Context

StockSavvy.ai notes that Oatly operates in a global plant-based dairy industry estimated at $21 billion in 2025, showing continued growth. Oat-based alternatives are a driving force in this growth, benefiting from consumer awareness of environmental benefits, alignment with younger generations' values, and oats' nutritional advantages. The company faces intense competition from conventional dairy giants (e.g., Danone, Lactalis) and other plant-based brands (e.g., Alpro, Califia Farms), particularly in China where competitors offer lower-cost products. Oatly's focus on sustainability and proprietary oat base technology aims to differentiate it in this competitive landscape.

Comparison to Industry Standards

• Oatly competes with conventional dairy companies such as Danone, Lactalis, Fonterra, Arla Foods, Chobani, Dean Foods, and Lactaid (owned by Johnson & Johnson), many of whom have substantially greater financial and other resources.
• The company also competes with other consumer product companies that develop and sell plant-based products, including oat, almond, soy, cashew, and hemp dairy alternatives, such as Alpro, Blue Diamond Growers, Califia Farms, Planet Oat, Ripple Foods, Oatside, and Ecotone.
• In China, many competitors sell plant-based products at a lower cost base and lower prices, posing a challenge to Oatly's competitiveness and margins in that market.

Management Changes

Corporate Governance

Legal Proceedings

• Settled two securities class action lawsuits, 'In re Oatly Group AB Securities Litigation' and 'Hipple v. Oatly Group AB et al.', in July and August 2024, respectively, for a total payment of $9.25 million.

Related Party Transactions

• Issued Convertible Notes to Nativus Company Limited, Verlinvest S.A., and Blackstone Funds on March 23, 2023, and April 18, 2023, with a fair value of $174.0 million. As of December 31, 2025, the fair value of outstanding Convertible Notes to related parties was $182.1 million.
• Entered into an agreement with an affiliate of Hillhouse Investment Management Ltd. (Hillhouse) on May 9, 2023, to sell an additional $35 million in Convertible Senior PIK Notes due 2028 (HH Notes).
• A former board member, Bernard Hours, was a 33% owner of Chef Sam, a distribution company, from which Oatly expensed $1.2 million in 2024 (and $1.1 million in 2023) under a Distribution Agreement, prior to his divestment in Q3 2024.

Stakeholder Impact

• Shareholders: Potential for increased value due to improved financial performance and strategic initiatives, but also dilution risk from Convertible Notes conversion and influence from major shareholders. Subject to specific U.S. federal income tax consequences if classified as a PFIC or if owning 10% or more of shares.
• Employees: Workforce reductions implemented as part of strategic actions, potentially impacting morale and recruitment. New incentive award plan (2021 Plan) aims to attract, retain, and motivate employees through share-based compensation.
• Customers: Continued focus on expanding distribution channels and product offerings to meet consumer demand. Potential for reduced competitiveness in markets like China due to pricing pressures.
• Suppliers: Continued reliance on a limited number of suppliers for key raw materials, exposing the company to supply chain disruptions and price volatility.
• Creditors: New Nordic Bonds and SSRCF provide financing but introduce new covenants and interest rate risks. Repurchase of U.S. Notes reduces outstanding debt.

Next Steps

• Complete the strategic review of the Greater China business within 2026.
• Invest $20 million to $30 million in 2026 for regular maintenance, efficiency, and capacity expansion in existing production facilities.
• Continue to focus on network optimization and expanding the use of sustainable transportation fuels.
• Launch flavored versions of the Matcha Oat Drink in 2026.

Key Dates

Recommendation

Oatly's 2025 results show significant operational improvements, including positive Adjusted EBITDA and reduced net losses, indicating progress towards profitability. The strategic review of the Greater China business and capital structure adjustments are positive steps to optimize the business. However, the company still faces substantial net losses, increased finance expenses, and ongoing macroeconomic and competitive pressures. While the trajectory is improving, the inherent risks and the need for successful execution of ongoing strategic initiatives suggest a 'hold' recommendation, advising investors to monitor progress closely before making further investment decisions.

Keywords

Plant-based dairy, Oatmilk, Sustainability, Foodservice, Retail, EBITDA, Financial performance, Supply chain, Strategic review, Convertible Notes, Nordic Bonds, Corporate governance, Risk management, SEC filing, Consumer goods, Food and beverage, Global expansion