“Third-quarter financial results were below our expectations, largely driven by COVID-19 restrictions in Asia, production challenges in the Americas, and continued foreign exchange headwinds,” Chief Executive Toni Petersson said in a statement.

The company had a technical issue at a plant in Ogden, Utah, Petersson told analysts on the company’s conference call. It believes these problems are transitory and that underlying demand for its products remains robust.

“I am disappointed with our ability to translate this third-quarter gross profit margin and sequential EBITDA improvement due to our operational execution shortcomings,” the executive said, according to a FactSet transcript.

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The company had a net loss of $107.9 million, or 18 cents a share, in the quarter, wider than the loss of $41.2 million, or 7 cents a share, posted in the year-earlier period. Revenue rose to $183 million from $171.1 million a year ago.

The FactSet consensus was for a loss of 10 cents and revenue of $210 million.

The company is now expecting full-year revenue of $700 million to $720 million, well below the consensus of $793.20 million.

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Oatly is taking strategic measures to adapt its supply chain network and simplify its structure with the aim of using an asset-light approach to improving profitability. That’s expected to greatly reduce capex going forward.

The company is also pursuing manufacturing partners to create a hybrid production network in certain regions. It expects to cut overhead and head count to cut up to 25% of costs related to group corporate functions and regional EMEA layers, seeking up to $50 million in annual savings by the first half of 2023.

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Mizuho said the numbers heighten liquidity concerns and are keeping it on the sidelines.

“Macro pressures from COVID lockdowns in Asia and a weakeningEurope backdrop are significant, and ongoing challenges ramping new Utah facility remain particularly concerning,” John. J. Baumgartner, managing director of research, wrote in a note to clients.

“A head count reorg and other efficiencies target $50 million of annualized savings by 1H23, but are more than outweighed by revenue and liquidity concerns.”

Mizuho has a neutral rating on the stock and is sticking with its $3.50 price target.

But CFRA said it’s sticking with its buy rating, while lowering its price target to $3.50 from $5.00.

” While the Q3 results and outlook were clearly disappointing, the positive is OTLY does not seem to be having a demand issue. Instead, we believe sales growth is mostly tied to production capacity, which should step up in Q4 and 2023,” said analyst Arun Sundaram.

He welcomed the company’s “major pivot” to an asset-light model, which should accelerate the path to profitability, although “it will likely have some implications on its long-term gross margin goal of at least 40%.”

Oatly shares have fallen 76% in the year to date, while the S&P 500
SPX,
+0.27%
has fallen 16%.