Oatly has booked a first-quarter loss of more than $75m for the first quarter of the year – but the company insists it is making headway on speeding up sales and improving its profitability.
For the opening three months of 2023, the Sweden-based business posted a net loss attributable to shareholders of the parent of $75.6m, compared to a net loss of $87.5m in the prior-year period.
It also booked an adjusted EBITDA loss of $49.9m, a $21.5m improvement on the adjusted EBITDA $71.4m loss it booked a year ago.
Revenue, meanwhile, increased 17.7% to $195.6m. Both the adjusted EBITDA and revenue results beat Wall Street expectations.
“We delivered solid results in the first quarter and we believe 2023 is off to a good start. We made progress against each of our key 2023 priorities: accelerate top line growth globally; continue to make improvements in the supply chain; and drive towards profitability, which we continue to expect to reach in 2024,” CEO Toni Petersson said.
“Oatly is starting to play offense in 2023 and each segment is starting to play offense in its own way. Given the good progress so far this year, we are reiterating our 2023 guidance.”
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The company is forecasting its revenue will grow by between 23% and 28% on a constant-currency basis in 2023.
Its guidance on profitability states: “Gross margin to improve sequentially quarter-over-quarter in fiscal 2023, reaching the high-20%s in the fourth quarter.”
Gross margin in the first quarter was 17.4%, up 790 basis points compared to a year earlier and 150 basis points higher than the fourth quarter of 2022.
The company had run up a net loss attributable to shareholders of the parent of $392.6m in 2022, which had grown from a loss of $212.4m in 2021 – despite a 12.3% rise in revenue to $722.2m.
Oatly’s transitionto a “more asset-light supply chain strategy” kicked off last year and culminated in a co-manufacturing deal with Canada-based Ya Ya Foods, which is taking over production at the company’s facilities in Ogden, Utah, and in Dallas Fort Worth, Texas. The aim is to free up Oatly to focus on innovation and execution in order to drive growth and ultimately profits.
On a call with analysts to discuss Oatly’s first-quarter results, Petersson said the move to working with Ya Ya Foods “is going very well”.
With Oatly’s supply chain “stable”, the company had managed to grow its market share in the Americas, its second-largest reporting region behind EMEA but ahead of Asia, Petersson explained. The company had also been able to invest in promotions.
He said: “Given that our supply chain’s stable, we have been able to drive good distribution expansion in retail, largely driven by an increase in the number of items for distribution points, while also seeing good expansion in the number of stores.
“We have started to increase our promotional rates in the last few weeks of the quarter. We expect that our promotional rates will continue to increase in the coming months. The promotions are not only intended to drive consumer demand but they also send an important signal to our retail customers. They were confident in our supply chain’s stability and ability to service the demand. It’s still early and we still have plenty of work to do but we are happy with the progress we’re making.”
Alongside the results, Oatly said Petersson, who joined the business in 2012, would become co-chairman of the company next month alongside current chair Eric Milou.
Before joining Oatly, Flatin spent 30 years with US food heavyweight Mars. He led its Royal Canin cat and dog food business as CEO and president and also managed a number of brands as president of the company’s chocolate division.
Petersson told analysts: “I have full faith that he will do a wonderful job and look forward to working alongside him as we continue to execute on our growth strategy.”