Oatly Group AB

Good morning and welcome to the Oatley fourth quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Brian Carney, Vice President, Investor Relations. Please go ahead.

Good morning. Thanks for joining us today. On today's call are our Chief Executive Officer, Jean-Christophe Flatan, our Global President and Chief Operating Officer, Daniel Ordonez, and our Chief Financial Officer, Marie-José David. Please review the cautionary statement regarding forward-looking statements and other disclaimers on slide 3, which are integrated into this presentation and includes the Q&A that follows. Please refer to the documents we have filed with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. On today's call, management will refer to certain non-IFRS financial measures, including adjusted EBITDA, constant currency revenue, and free cash flow. Please refer to today's release for reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. In addition, Oatly has posted a supplemental presentation on its website for reference. I'd now like to turn the call over to Jean-Christophe.

Thank you, Brian, and good morning, everyone. I want to begin today's discussion with slide four by emphasizing how grateful and proud I am of the entire Oatly team for delivering our first full year of profitable growth. We have achieved a major milestone of transforming Oatly from structurally unprofitable with slowing growth to a company that is now structurally profitable with accelerating goals. So thank you from the bottom of my heart to all the Oatly employees for making this happen and for continuing to nourish and grow our brand while staying true to our mission. This is truly a significant milestone. Moving to slide five. which has the key messages I want you to take away. First, for the first time since our IPO, and for the first time in seven years, we drove profitable growth for the full year with solid constant currency revenue growth and positive adjusted EBITDA. I'm also proud of the how we have delivered these results. We continue to drive efficiencies throughout the organization while simultaneously reinvesting behind our refreshed growth playbook. And we are seeing clear signs that our playbook is working and having real impact in every market where we have fully deployed it. We have truly embedded a culture that is focused on the impact of our investments. As we look forward, we expect to accelerate this impact as we continue to execute our growth strategy and drive incremental demand. These results we are driving with our Refresh Growth Playbook, coupled with the visibility we have to additional growth drivers, give us the confidence to expect even stronger profitable growth than what we drove in 2025. We continue to see significant potential ahead of us, and we are confident that we are taking the right steps to turn that potential into tangible results. Turning to slide 6. Here, you can see the improvements in three of our most important KPIs. Since beginning our turnaround in 2022, we have grown revenue 19%, improved adjusted EBITDA by $275 million, and improved free cash flow by $436 million. And in 2025, we drove solid top-line growth and positive adjusted EBITDA, which officially entered us into our profitable growth era. While we are turning the page from one chapter to the next, our story does not fundamentally change. We remain focused on driving growth and impact in a disciplined and profitable way. Part of that discipline building will be a continued focus on improving our free cash flow, which has significantly improved each year but is not yet where we want it to be. Our business plan remains fully funded, and bringing the company to structurally positive free cash flow is important to us. And we fully intend to drive the business to that milestone, not just from improvement in the P&L, but from pulling on all available levers, including working capital. Slide seven goes one level deeper on our transformation. Here, you can see that underlying health of our business has continued to improve as we have driven toward profitability. In 2025, we sold more volume than ever before and 18% more than in 2022. At the same time, we continue to improve our gross margin to over 32%, which is 2,100 basis points higher than 2022. And on slide 8, you can see the results of the cultural obsession with driving efficiencies to provide fuel for gross driving investments. Since Daniel and I joined the company, we have reduced our costs of goods sold per liter by 23%, reflecting the significant restructuring of our supply chain, including the strategic partnership in North America that led to a consolidation of co-packers, the closure of our Singapore facility, and the creation of a culture obsessed with efficiency and continuous improvement. We have also reduced our total SG&A by nearly 100 million, or 21% of revenue, while continuing to invest to support our brand. We have taken a portion of these savings and redeployed them in a very disciplined and deliberate manner by ensuring that our investments are all rooted in our refreshed Rose Playbook that Daniel will describe. So let me give you just some examples in the next few slides. We have invested in new on-trend products that are extremely relevant to today's consumer. We have launched new flavors, such as the flavored barista products. We have launched new product varieties, such as matcha. And we have launched new products for specific customer needs, such as the barista matic, that is formulated specifically for automatic coffee machines. We invested in our lookbooks and future of taste reports, both of which actively inspire customers and consumers to think about, use, and consume hotly while also solidifying us as the global taste authority. We invested in events that introduce our products to new customers and consumers, while also being a cultural experience that people share on their personal social media platforms. And we invested in card-stopping in-store executions to ensure that consumers make this part of their daily lives. As you can see, our journey to profitable growth has not just been a cost-cutting exercise. We have been shaping and building this business to sustainably drive profitable growth far into the future. Slide 15 shows our focus areas for 2026. As Danielle will outline, we are seeing very positive traction on our refresh growth strategy and we will be doubling down on its execution. We will, of course, maintain our culture of efficiency, continuous improvement and impact. This cultural obsession continuously generates fuel for growth-driving investments and deploys those investments in a very disciplined manner. And finally, while we do not have a detailed update for you today, In 2026, we plan on completing the strategic review of the Greater China segment. We continue to evaluate a range of options, including a potential carve-out, with the goal of accelerating growth and maximizing the value of the business. We will update the market on our progress as necessary. Slide 16 shows our guidance. In 2026, we expect the continued rollout of our Refresh Growth Playbook to drive an acceleration in our profitable growth. Specifically, we expect to drive constant currency revenue growth of 3% to 5% and adjusting the BDA of 25 to 35 million.