Oatly Group AB (Nasdaq: OTLY) lowered its full-year 2026 adjusted EBITDA outlook as accelerating inflation, higher North American fuel and freight costs, and effects from the Middle East conflict increased pressure on profitability. The oat-drink maker nevertheless maintained its constant-currency revenue growth guidance after third-quarter sales rose 9.1%, led by Europe & International.
Revenue reached $243.1 million for the three months ended September 30, up from $222.8 million a year earlier. Constant-currency revenue, a non-IFRS measure, increased 8.9%, while volume sold rose 4.2% to 156.9 million liters.
Gross profit totaled $83.0 million, with gross margin expanding 436 basis points to 34.1%. Supply-chain and absorption improvements contributed 4.5 percentage points to the year-over-year margin change, while net pricing and product mix added 1.2 points. Inflation reduced the margin by 1.1 points, and foreign exchange and other items lowered it by 0.2 points. Oatly said about 90 basis points of pressure reflected the Middle East conflict and U.S. freight constraints.
Adjusted EBITDA rose to $9.4 million, or 3.9% of revenue, from $3.1 million in the prior-year quarter. A $16.6 million increase in gross profit more than offset a $10.3 million unfavorable change in selling, general and administrative expenses and other items. On an IFRS basis, Oatly reported a loss before tax of $25.3 million, compared with $64.5 million a year earlier.
Europe & International leads growth
Europe & International generated $147.6 million in segment revenue, including intersegment sales, as constant-currency revenue increased 20.4% and volume advanced 17.6%. Adjusted EBITDA for the segment climbed by $9.6 million to $31.5 million.
European retail takeaway sales for Oatly increased 17% year over year in the quarter, compared with 9% growth for oat milk and 8% for the broader plant-based milk category in the markets tracked by the company. Out-of-home volume in Europe & International reached 20.2 million liters, compared with 16.2 million liters in the third quarter of 2025.
Oatly also reported higher household penetration in several European markets, including Germany, Sweden and the Netherlands, with gains among younger households. The company launched its new fiber-focused product platform in Europe & International during the quarter and plans a North American launch in the first quarter of 2027.
North American distribution supports sales
North America recorded revenue of $63.8 million, up from $62.1 million a year earlier. Constant-currency revenue grew 2.9%, while volume increased 0.4%. The segment produced adjusted EBITDA of $0.3 million, improving by $1.6 million from an adjusted EBITDA loss of $1.3 million in the prior-year period.
Oatly attributed the region’s revenue performance to retail distribution growth. U.S. retail takeaway sales increased 7.7% year over year in the third quarter, while the company said it continued to narrow its oat-category share gap with the leading competitor. Its value share of oat products in measured U.S. retail channels reached 33.1% over the latest 12 weeks, compared with 26.6% at the end of 2025. Oatly is also expanding its North American portfolio through additional flavors and the planned fiber-product rollout.
Greater China remained under pressure. Segment revenue declined to $32.0 million from $37.4 million, with constant-currency revenue down 19.3% and volume falling 26.2%. The segment posted an adjusted EBITDA loss of $1.9 million, a $3.5 million deterioration from the prior year. Oatly said macroeconomic headwinds continued to weigh on foodservice, partly offset by sustained retail growth. Its strategic review of the Greater China business remains scheduled for completion in 2026.
Profit outlook reduced as cost pressure rises
Oatly now expects full-year adjusted EBITDA of $16 million to $20 million, down from its previous expectation of reaching the lower end of a $25 million to $35 million range. Management said the revised outlook incorporates the impact of the Middle East conflict and rapidly escalating North American fuel and freight costs on fourth-quarter profit.
The company maintained its forecast for 8% to 10% constant-currency revenue growth, with an expected foreign-exchange tailwind of about 200 to 250 basis points. It also retained its 2026 capital-expenditure outlook of $20 million to $30 million.
Third-quarter free cash flow was negative $18.4 million, compared with approximately negative $5 million a year earlier. Oatly attributed the decline to capital-expenditure timing, inventory built to support product innovation and distribution, and the reversal of a calendar-related working-capital benefit recorded in the second quarter.
The outlook remains subject to significant uncertainty. Oatly identified continued inflation, transportation and energy costs, supply constraints, dependence on co-manufacturers and major customers, currency fluctuations, substantial debt, and the outcome of the Greater China review among its principal risks. The company also cautioned that it has a history of losses and may be unable to achieve or sustain profitability.
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