Renown plant-based drink manufacturer Oatly has announced decision to close its Singapore plant after just 3 years in operation.
The closure of the Singapore-based plant, a S$30 million (US$22 million) joint-venture investment with Yeo Hiap Seng, is expected to improve Oatly’s future cost structure and trim its capital expenditure needs moving forward. Oatly is adopting an ‘asset-light’ supply chain strategy and it expects its growth in the Asia Pacific region, excluding Greater China, to be supported by its existing facilities in Europe. The decision is expected to further increase capacity utilisation of its European factories.
The company had previously separated its Greater China business from the rest of its Asian business, a move which Oatly said had enabled it to increase its local focus and competitiveness, and led to significant improvements in the health of its Greater China segment.
Oatly estimates that its restructuring and other exit costs to result in net cash outflows of between US$25 million and US$30 million through to 2027, after taking into consideration anticipated proceeds from selling certain equipment. More than 34 of its employees in Singapore will also be affected.
