Beyond Meat announced better than expected forecasts for the current year, including double-digit gross margins, indicating that the group was making progress in its efforts to halt haemorrhaging cash.
The plant-based meat company alarmed investors last year when its gross margins turned negative in the second quarter and it cut its revenue outlook as people turned away from meat substitutes and production costs soared.
Beyond Meat said it was aiming to become cash flow positive in the second half of 2023, and expected revenues to range between $375mn and $415mn, compared to $418.9mn for 2022. It also forecast a gross margin in the “low double-digit range”.
Its full-year 2022 results were also better than expected, with revenues down 0.8 per cent from the previous year at $418.9mn and a negative gross margin of 5.7 per cent compared to consensus estimates of $414.6mn in revenues and negative gross margins of 6.4 per cent.
The California company’s shares, which fell as low as $11.34 in December after they had soared to $239 following its IPO in 2019, jumped 13 per cent in after-hours trading to $19.38.
Ethan Brown, Beyond Meat’s chief executive, said the company was making “progress on margin recovery and operating expense reduction, and continued inventory drawdown”.
This comes after it was forced to shift its “growth above all” strategy towards one that prioritises cash flow by cost cutting and targeting growth areas in October. The faux-meat group reduced operating expenses by 36 per cent in 2022, including cutting 240 jobs, or 20 per cent of its workforce, and cut the number of manufacturers contracted to make its products from eight to three.
Nevertheless, the company said the business was still consuming “quite a bit of cash” adding that it was taking measures to reduce those levels.
Since the sales boom in 2020, growth in plant-based meat sales stagnated last year, as repeat purchases by consumers waned. Industry executives and analysts said that consumers were turned off by the category’s typically high prices amid the cost of living crisis. Shoppers also failed to repurchase many of the products that failed to live up to their billing as being as tasty as real meat.
The weakness in demand growth has affected the whole industry. Earlier this month Impossible Foods notified the California state labour department that it was cutting 132 jobs. That equates to about 16 per cent of its total workforce, based on figures from data firm PitchBook. The across the board cuts, originally reported by Bloomberg, included director-level jobs and science and research roles.
Last year JBS, a leading meat group headquartered in Brazil, closed its US plant-based meat business Planterra, while Canada’s Maple Leaf reduced the size of its venture.
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