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MALMÖ, Sweden, Dec. 18, 2024 (GLOBE NEWSWIRE) — Oatly Group AB (Nasdaq: NASDAQ:) (Oatly or the Company), the world’s largest and original oat beverage company, today announced the closure of its Singapore facilities 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.
Jean-Christophe Flatin, CEO of Oatly, commented: Over the past two years, our supply chain teams have done a good job improving utilization, efficiency and reliability, while finding solutions that allow us to expand gradually build capacity when necessary to support our growth. business. These actions have resulted in strong service rates and improved gross margins. Additionally, our previous decision to separate our Greater China business from the rest of the Asian business has allowed us to increase our local focus and competitiveness, which has led to significant improvements in the health of our Greater China segment.
He continued: We hope that the action we are announcing today will build on those collective improvements and further strengthen our ability to ensure we have the right amount of capacity, when we need it, while being efficient with our capital and costs. We also expect that the continued simplification of our operations will allow us to sharpen our focus on execution as we move toward structural and consistent profitable growth and ultimately deliver on our Company’s mission. On behalf of the entire Oatly team, I want to express my deep gratitude to the Singapore plant team for the work they have done over the years.
Singapore facility closure
As part of the Company’s ongoing assessment of its Asian supply chain network, the Company has decided to close its manufacturing facility in Singapore, subject to applicable lender approvals. The facility is part of the Europe and International segment. Following the closure of the facilities, the segment’s expected growth in the Asia-Pacific region will be supported by the segment’s existing facilities in Europe. These actions are expected to further increase the capacity utilization of European factories within the Europe and International segment.
As part of the closure of the Singapore facility, the Company expects to incur non-cash impairment charges of approximately $20 to $25 million in the fourth quarter of 2024. Additionally, the Company estimates that restructuring and other exit costs will result in $25 to $30 million. of net cash outflows through 2027, after taking into account expected revenue from the sale of certain equipment. The Company expects to accrue these costs in the fourth quarter of 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.
About Oatly
We are the largest and most original oat drink company in the world. For more than 25 years, we have focused exclusively on developing expertise around oats: a global energy crop with inherent properties suitable for sustainability and human health. Our commitment to oats has resulted in fundamental technical advances that have allowed us to unlock the breadth of the dairy portfolio, including milk alternatives, ice creams, yogurts, cooking creams and spreads. Headquartered in Malmö, Sweden, the Oatly brand is available in more than 20 countries worldwide.
For more information, visit www.oatly.com.
Contacts
Oatly Group AB
+46 418 47 55 00
investors@oatly.com
info@oatly.com
Forward-looking statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any express or implied statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation , statements regarding our financial outlook for 2024, improving profitability, long-term growth strategy, expected capital expenditures, anticipated returns on our investments, anticipated supply chain performance, anticipated impact of our improvement plans, impact advance of our decision to discontinue construction of certain production facilities, plans to achieve profitable growth and anticipated cost savings, as well as statements that include the words expect, intend, plan, believe, project, forecast, estimate, may, should, anticipate, aspire, potential, continue, is/is probable and similar statements of a future or prospective nature. Forward-looking statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected, including, but not limited to: successful exit and closure of the Singapore facility and receipt of applicable approvals. of the lender. , our history of losses and inability to achieve or maintain profitability; including due to high inflation and increasing costs of transportation, energy and materials; reduced or limited availability of oats or other raw materials and ingredients that meet our quality standards; failure to obtain additional financing to achieve our objectives or to obtain necessary capital when necessary on acceptable terms, or at all; bankruptcy of the financial institutions in which we keep our deposits; damage to or disruption of our production facilities; damage to our brand and reputation as a result of real or perceived quality or food safety problems with our products; food safety and foodborne illness incidents or other safety issues that may result in lawsuits, product recalls or regulatory enforcement actions; our ability to compete successfully in our highly competitive markets; reduction in sales of our oat drink varieties; the inability to effectively navigate our shift to an asset-light business model; failure to meet our new or existing environmental metrics and other risks related to sustainability and corporate social responsibility; litigation, regulatory actions or other legal proceedings, including environmental and securities settlements and class actions; changes in international trade policies, treaties and tariffs; global conflict, including the ongoing wars in Ukraine and Israel; changes in our tax rates or exposure to additional tax liabilities or assessments; supply chain delays, including delays in receiving products at factories and ports, and an increase in transportation costs; the impact of increasing raw material prices, transportation and labor costs on our cost of goods sold; failure of our logistics providers to deliver our products on time, or at all; our ability to successfully execute our cost reduction activities in accordance with our expectations and the impact of such actions on our business; lack of development and maintenance of our brand; our ability to introduce new products or successfully improve existing products; failure to retain our senior management or attract, train and retain employees; cybersecurity incidents or other technological disruptions; risks associated with our operations in the People’s Republic of China; the success of our strategic reset in Asia; failing to adequately protect our intellectual property and other proprietary rights; our ability to successfully remediate previously disclosed material weaknesses, or other future control deficiencies, in our internal control over financial reporting; impairment of the value of our assets; possible delisting from Nasdaq; our status as a foreign private issuer; risks related to the significant influence that our largest shareholder, Nativus Company Limited, entities affiliated with China Resources Verlinvest Health Investment Ltd., has over us, including significant influence over decisions requiring shareholder approval; and the other important factors discussed under the heading Risk Factors in our Annual Report on Form 20-F for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission (SEC) on the 22nd March 2024 and our other filings with the SEC, as such, may be updated from time to time. Any forward-looking statements contained in this press release speak only as of the date hereof and, accordingly, undue reliance should not be placed on such statements. Oatly disclaims any obligation or commitment to update or revise any forward-looking statements contained in this press release, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.
