Oatly has announced the closure of its Singaporean facility, as the oat drink-maker seeks to reduce future capital expenditure needs.
The Singaporean facility forms part of the company’s Europe & International segment, and it is expected to improve Oatly’s cost structure, the Swedish-based firm noted in a statement.
‘Improved Efficiency’
“Over the past two years, our supply chain teams have done a good job at improving utilisation, efficiency and reliability, while also finding solutions to enable us to gradually expand capacity when needed to support our growing business,” commented Jean-Christophe Flatin, Oatly’s chief executive.
“These actions have led to strong service rates and improved gross margins. Additionally, our prior decision to separate our Greater China business from the rest of the Asian business has enabled us to increase our local focus and competitiveness, which has led to significant improvements in the health of our Greater China segment.”
European Support
The group noted that, following the closure of the Singaporean facility, expected growth in the company’s Asia-Pacific region will be supported by its existing facilities in Europe, in which capacity utilisation will be increased.
In addition, as a result of the facility’s closure, Oatly expects to incur non-cash impairment charges of approximately $20-25 million in the fourth quarter of 2024, while restructuring and other exit costs will result in $25-30 million of net cash outflows through 2027.
“We expect that the action we are announcing today will capitalise on those collective improvements and further strengthen our ability to ensure that we have the right amount of capacity when we need it, while being efficient with our capital and costs,” Flatin added. “We also expect the continued simplification of our operations to enable us to sharpen our focus on execution, as we drive toward consistent, structural profitable growth and, ultimately, deliver on our company’s mission.”
Oatly plans to discuss additional details related to its exit from Singapore in its fourth-quarter earnings call, scheduled for early 2025.
