Oatly in the three months ended March 31 sustained a loss of $45.8 million, a 39% smaller loss than the $75.6 million lost in the first quarter of 2023. Revenues were $199.2 million, up 1.8% from $195.6 million. Volume during the quarter was up 3%.

First-quarter selling, general and administrative expenses were $78.7 million, down $20.2 million from $98.9 million a year earlier. Jean-Christophe Flatin, chief financial officer, said the company was on track toward its goal of cutting SG&A expenses by $85 million on an annualized basis.

“We are making good progress toward achieving profitable growth,” Flatin said in a May 1 conference call with investment analysts. “…We are clearly seeing the benefits from the bold actions we have taken over the past two years. These benefits are most clear in our gross margin expanding nearly 1,000 basis points year-over-year.”

Investors were encouraged by the improved financial results. The company’s shares closed at $1.15 in NASDAQ trading April 30, up 15% from the day before. Since then, Oatly shares have risen as high as $1.33, a 33% increase from before the financial results were announced. The price was a small fraction of its May 2021 IPO pricing at $17 per share or its peak price of $29 the following month.

For the full year, Oatly affirmed its projected EBITDA loss of between $35 million to $60 million. Revenues during the year are expected to grow 5% to 10% on a constant currency basis.

While upbeat about Oatly’s performance, Flatin said it was too early for the company to revise its guidance.

“We recognize that we are only one quarter through the year and that our three operating segments are in very different stages of their turnaround journeys, their maturity, their execution and the amount of traction they have achieved on the strategic actions,” he said. “Therefore, we are reiterating our full-year guidance across all metrics.”

Oatly was nearly breakeven in North America in the quarter measured by its EBITDA, with a loss of $388,000, down 98% from $11.8 million a year earlier.

Revenues in the first quarter of 2024 totaled $67 million in North America, up 4.6% from $64 million in the first quarter last year. The company’s North American retail business grew slightly faster than in foodservice sales. Volume for the three months totaled 39 million liters, up 11% from 35 million the year before.

“The 11.4% volume increase was due to higher volumes primarily in the retail and foodservice channels as the company continued to expand distribution and launch new products,” Oatly said. “Approximately 54% of North America revenue was from the retail channel in the first quarter of 2024 compared to 52% in the prior year period.”

The company said foodservice sales jumped 35% in the quarter, excluding its largest customer.

Daniel Ordonez, chief operating officer, offered insights into the company’s relationship with its largest foodservice customer.

“I am very glad to report that we have come now to an agreement on new terms with our largest foodservice customer, and we plan to move forward on this mutually beneficial basis,” he said. “This is expected to facilitate joint business planning and innovation, which will further build on our overall company profitable growth agenda.”

While the customer is not mentioned by name, Starbucks is Oatly’s only foodservice customer singled out in the corporate overview in its annual report (Form 20-F, filed with the Securities and Exchange Commission). Oatly has had a supply relationship with Starbucks for several years, and Howard Schultz, the retired longtime CEO of Starbucks, was an investor in Oatly before its IPO.

Asked during questions and answers with analysts about the new agreement, Ordonez intimated the pact will dramatically reduce uncertainty and that business changes with the customer no longer threaten to meaningfully undermine Oatly’s North American results.

“The way you should look at this moving forward when it comes to planning and the outlook is, think still on a modest headwind, less than we expected so far,” he said. “But with a very stable and even neutral impact in the overall business as we move forward. So the situation has improved. It looks better, and it’s certainly moving in the right direction.”

Ordonez said that during the first quarter, Oatly chilled milk sales rose 2.3% at retail, better than the 1.5% growth rate for oat milk sales overall and the negative 3.5% sales growth for plant-based milks.

In Oatly’s other major markets, sales rose 10% in Europe, its largest market, though volume in the market was up just 4%. In China, sales fell 30% with volume down 16%.