Sweden: Oatly implements ‘asset-light model’ to put supply chain ‘on firmer footing’

Oat milk manufacturer, Oatly has sold majority of its manufacturing facilities to a contractor as part of a switch to “hybrid production” in hopes of cultivating more profit.

Oatly announced partnership with food and beverage manufacturer Ya Ya Foods, selling the company’s production facilities and most of its machinery under an “asset-light model”, it revealed in its fourth quarter earnings results.

The company will retain ownership of its proprietary oat base technology, but Ya Ya Foods will take over mixing, filling, and packaging of Oatly products at its factory in Utah, and an upcoming factory in Texas. This will help the company improve its agility, reduce the complexity of operations, and drive profitability into the new year, it said.

It hopes to keep reducing costs and improving its supply chain throughout 2023.

Chief Executive Officer at Oatly, Toni Petersson said “Our supply chain is back on firmer footing, we have clear line of sight to reaching profitability, and we have the liquidity needed to fully fund our growth investments and reach financial self-sufficiency. Therefore, we believe we are well-positioned to start playing offence in 2023.

“Our teams will be focused on fully capturing the underlying global demand for our products while continuously improving our supply chain. We expect this focus to enable us to move along our path to profitability, set up fiscal 2024 for positive adjusted EBITDA, and drive sustainable, long-term shareholder value creation.”

Chief Executive Officer at Ya YA Foods, Yahya Abbas said “We look forward to working with Oatly and supporting their transition to a more asset-light model, allowing them to leverage our significant expertise in aseptic beverage packaging… The two properties we are acquiring will increase our geographic profile and scale, allowing us to serve the vast majority of the United States and Canada.”

With the supply chain reset underway, the manufacturer intends to expand operations in Europe, the Middle East and Asia, without the need for additional supply chain infrastructure, which it said would be supported by its existing facilities in Sweden.

The company also said it intends to reduce overhead and headcount in its corporate operations.

Oatly made a loss on its earnings before tax for 2022’s fourth quarter of $111.2m, compared to a loss of $81.8m in the same period the year before. The increase in losses was partly the result of higher operating expenses related to the sale of assets to Ya Ya Foods, which hadn’t completed in the quarter.