Oatly to shut down Singapore facility
Swedish oat milk producer Oatly is closing its manufacturing facility in Singapore, the company’s first factory in Asia, after evaluating its supply chain network in the region.
Asia-Pacific will be served instead by its facilities in Europe, it said on Dec 18. The company also has a production facility in China and a separate Greater China segment.
Oatly said in its statement that the move “aligns with the company’s asset-light supply-chain strategy”. The closure is expected to improve Oatly’s future cost structure and reduce the need for future capital expenditure, it noted.
In March 2021, The Business Times reported that Oatly and Singapore’s food and beverage manufacturer Yeo Hiap Seng would jointly invest $30 million in equipment and facilities to produce the vegan milk producer’s oat drink in Singapore.
The facility in Singapore opened in October 2021. It later announced the opening of its first production facility in China in November the same year.
At its launch, the Singapore facility was expected to produce 60 million litres of oat milk a year, with the potential for scaling up. The oats were reported to be sourced from Sweden.
Mr Jean-Christophe Flatin, chief executive of Oatly, said: “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.”
He also said the separation of their Greater China business from the rest of the Asian business had led to “significant improvements in the health” of their Greater China segment.
Mr Flatin said the closure of the manufacturing facility in Singapore will help to optimise the company’s production capacity while being efficient with its capital and costs.
“We also expect the continued simplification of our operations to enable us to sharpen our focus on execution as we drive towards consistent, structural profitable growth and ultimately deliver on our company’s mission,” he said.
“On behalf of the entire Oatly team, I want to express my deep gratitude to the team at the Singapore plant for the work they have done over the years.”
Following the closure, the firm expects to incur non-cash impairment charges of about $20 million to $25 million in the fourth quarter of 2024, Oatly said.
Restructuring and other exit costs are estimated to be $25 million to $30 million of net cash outflows through 2027, after taking into consideration anticipated proceeds from the sale of certain equipment, it added.
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