Nestlé announces US$498M loss due to closure of Limerick infant formula plant

IRELAND – Nestlé has disclosed that the closure of its Wyeth Nutritionals infant formula plant in Askeaton, County Limerick, will carry a financial burden of US$498.4 million.

The plant’s phased shutdown, scheduled from March 2025 to March 2026, is expected to eliminate 542 jobs, delivering a significant economic impact on Ireland’s mid-west region and its dairy industry.

According to Nestlé, the Askeaton facility has long relied on an annual supply of 50 million gallons of milk from local farmers to produce infant formula, primarily for the Chinese market.

However, as reported by the company, declining birth rates in China have significantly reduced demand.

Official figures indicate that births in China have dropped from 18 million in 2016 to an estimated nine million in 2023, drastically affecting market conditions.

Recently published financial accounts for Wyeth Nutritionals Ireland Ltd. reveal a pre-tax loss of €460.3 million for 2023. This decline has been largely attributed to exceptional closure-related costs amounting to €472.4 million.

These include €263 million in impairment charges, with €136.1 million tied to plant and machinery and €127.8 million related to freehold land and buildings.

The company’s directors noted that research and development operations at the Askeaton site will conclude in March 2025, while manufacturing will continue until the full shutdown in March 2026.

A consultation process involving employees and unions, concluded successfully in April 2024, has set the groundwork for winding down operations. Plans are also in place to liquidate the company once all activities cease.

Despite the forthcoming closure, Wyeth Nutritionals Ireland Ltd. reported a modest revenue increase of €16.4 million in the past year, reaching €242 million.

However, production volumes declined by 10% year-over-year, contributing to an overall 21% drop in output since 2021.

The closure’s broader economic implications have also been noted. Staff costs for 2023 totaled €64 million, down from €68.5 million in 2022, reflecting a slight reduction in the workforce to 489 employees.

Analysts have pointed out that the plant’s significance extends beyond direct employment, affecting local suppliers and the regional economy.

Financially, the company’s position has deteriorated considerably. According to the latest reports, a shareholders’ deficit of €209.96 million was recorded at the end of 2023, following a full write-down of tangible assets valued at €307.8 million.