Oatly Group to close manufacturing facility in Singapore

Oatly Group (OTLY) announced the closure of its Singapore facility in the Europe and International segment. This action aligns with the company’s asset-light supply chain strategy and is expected to improve the company’s future cost structure and reduce future capital expenditure needs. As part of the company’s ongoing evaluation of its Asian supply chain network, the company has decided to close its manufacturing facility in Singapore, subject to any applicable lender approvals. The facility is part of the Europe & International segment. Following the closure of the facility, the expected growth in the segment’s Asia-Pacific region will be supported by the segment’s existing facilities in Europe. These actions are expected to further increase capacity utilization of the European factories within the Europe & International segment. As part of the closure of the Singapore facility, the company expects to incur non-cash impairment charges of approximately $20M to $25M in the fourth quarter. In addition, the company estimates restructuring and other exit costs will result in $25M to $30M of net cash outflows through 2027, after taking into consideration anticipated proceeds from selling certain equipment. The company expects to accrue for these costs in the fourth quarter 2024. The closure of the facility is expected to improve the company’s future cost structure and reduce future capital expenditure needs. The company will discuss additional details on its fourth quarter earnings call in early 2025.