Oatly Group NASDAQ: OTLY reported what management called a “solid performance” in the first quarter of 2026, driven by revenue growth, gross margin expansion, and improved profitability, while reaffirming full-year guidance amid rising cost uncertainty tied to the conflict in the Middle East.
First-quarter results show margin and EBITDA improvement
Chief Executive Officer Jean-Christophe Flatin said the company delivered a strong start to the year “both on top line and bottom line,” which he said builds confidence in Oatly’s plan to “accelerate profitable growth.”
For the quarter, Oatly’s revenue increased 15.6%, or 8.1% on a constant currency basis. Gross margin rose to 33.4%, an improvement of 188 basis points compared to the prior year’s first quarter. Adjusted EBITDA was SEK 5 million, or 2.2% of net sales, representing an improvement of SEK 8.7 million year-over-year.
Free cash flow was an outflow of SEK 11.7 million, which Flatin said was an SEK 8.8 million improvement versus last year. CFO Marie-José David emphasized that the company’s business plan “remains fully funded,” though she added that Oatly does not expect positive free cash flow for the full year 2026. She said improvement is expected to come primarily from “higher Adjusted EBITDA and working capital improvements.”
Management outlines the “refreshed growth playbook”
Global President and Chief Operating Officer Daniel Ordoñez said Oatly has spent the past two years deploying a “new playbook” designed to “attack barriers to consumption, drive relevance, and increase availability.” Ordoñez described the strategy as expanding beyond Oatly’s historical consumer base—lactose-intolerant and environmentally conscious shoppers—to target younger consumers by emphasizing “taste and health” in beverages.
Ordoñez pointed to product and commercial activity centered on beverages, including the Barista Edition, flavored barista items (such as caramel, vanilla, and popcorn), and recent flavor launches in selected markets including churros and coconut. He also highlighted expansion of the matcha range with a strawberry flavor, and said the company’s Cold Foam Barista has reached “many of our top customers,” calling it a “breakthrough product” for foodservice.
As part of execution, Ordoñez said Oatly has “over 60 beverage market developers around the world” who spend “over 1,500 hours a week” with out-of-home customers to help design menus and recipes. He also described Oatly’s increased focus on digital-first communications and social media, alongside culture-focused collaborations, including a partnership with indie fashion brand AVAVAV during Milan Fashion Week.
Regional performance: Europe strong, North America improving, China pressured
Ordoñez said the company is seeing the playbook work “in Europe and increasingly so in North America.” In Europe and International, he reported another quarter of 14.5% constant currency growth, describing it as a “stellar performance,” supported by growth across both established and newer markets.
In North America, Ordoñez said the segment posted 12.3% growth in the quarter excluding the segment’s largest foodservice customer, while total net growth was 3.8%. He characterized the trajectory as “step by step” progress and said the company is “mildly optimistic” it is approaching a tipping point, while noting retail changes can take longer due to timing lags.
David added that the quarter marked “our first period of positive volume growth in North America since Q4 2024.” She said North America segment Adjusted EBITDA decreased by SEK 0.5 million to SEK 0.7 million, driven by higher costs of goods sold tied to increased freight and warehousing costs.
In Greater China, Oatly’s constant currency revenue declined 6.4% in the quarter, which David attributed to strong competition and price pressure in the out-of-home channel, partially offset by retail growth. Ordoñez said retail in China “doubled in quarter one year-over-year” and now represents “close to a third of the segment’s revenue.” The segment recorded negative SEK 0.8 million in Adjusted EBITDA.
Cost pressures tied to Middle East conflict factor into EBITDA outlook
While reaffirming full-year guidance, management emphasized that costs have been impacted since March by the Middle East conflict. Flatin said the company has not seen a demand impact so far, but the conflict is “already visible in our costs from March onwards and brings further uncertainty for the rest of the year.”
He said the cost impact has been “mostly fuel prices related,” affecting logistics directly and packaging indirectly. In response, he said Oatly is “permanently adapting” supply chain choices and leveraging “efficiency and frugality” to mitigate impacts.
Responding to a JPMorgan question, Flatin detailed that Oatly has some structural and contractual protections, including hedged energy contracts at European factories, advanced raw material contracts, a pellet boiler at its Landskrona facility, and an electric truck fleet used in parts of its European logistics network. However, he said higher shipping and logistics costs in both Europe and North America, along with higher packaging costs worldwide, have created a “net increase” in cost of goods sold and logistics that was visible in March and is expected to be “fully at play” in the second quarter.
Guidance reaffirmed; China strategic review continues
Oatly reaffirmed its 2026 outlook for constant currency revenue growth of 3% to 5% and Adjusted EBITDA of SEK 25 million to SEK 35 million, but now expects EBITDA “towards the low end” of the range. David said that based on recent FX rates, foreign exchange is expected to add roughly 100 to 200 basis points to full-year net sales growth, assuming no change in rates for the remainder of the year.
David also said the company expects the second quarter to be lower than the first quarter, citing the cost impact from the Middle East conflict and a “strong brand investment season,” with improvement expected in the back half of the year as volatility normalizes and as front-half-weighted selling, branding, and distribution investments begin to yield benefits.
On the top line, Flatin addressed why guidance remains below first-quarter constant currency growth, saying “one quarter does not make the year,” pointing to a tougher comparison base in the second half of 2026 and ongoing macro volatility. He said the company is choosing to be “conservative” and will monitor conditions closely.
Management also reiterated plans to complete the strategic review of the Greater China segment during 2026. Flatin said Oatly continues to evaluate “a range of options, including a potential carve-out,” with the goal of accelerating growth and maximizing value, and said the company would update the market “as necessary.” David noted that Oatly does not allocate corporate costs to individual segments.
For capital spending, David said guidance remains unchanged, with 2026 CapEx expected to be SEK 20 million to SEK 30 million.
About Oatly Group NASDAQ: OTLY
Oatly Group is a Sweden-based food and beverage company specializing in the development, production and sale of oat-derived dairy alternatives. The company’s product lineup includes oat-based drinks, ice cream, yogurts, spreads and cooking creams, all marketed under the Oatly brand name. By leveraging proprietary processing technology, Oatly extracts the nutritional benefits of oats—such as soluble fiber and plant protein—while delivering taste and texture profiles that closely mimic traditional dairy products.
Founded in 1994 as a spin-off from research at Lund University, Oatly initially focused on exploiting the health and functional benefits of oat beta-glucans.
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