KUALA LUMPUR: Rex Industry Bhd expects to recognise a provision for retrenchment costs amounting to about RM2mil and other decommissioning expenses following the closure of its production facility in Bukit Minyak Industrial Park, Seberang Perai Tengah, Pulau Pinang.
In a filing with Bursa Malaysia, the food and beverage manufacturer said it has decided to shutter the 7.7-acre facility as part of a business rationalisation plan.
It noted that the decommissioning exercise will only apply to the factory, which is involved in the manufacture of canned foods and drinks, whereas the warehouse located within the said production facility will be maintained for inventory storage purposes.
Following the closure of the facility, the group will reallocate its resources to its two other production facilities, which will help it utilise its resources more efficiently and reduce its operating costs.
"Specifically, the company will reallocate certain identified machineries to the production facility in Jawa Timur, Indonesia and the identified machineries and manpower to the production facility in Batu Pahat, Johor," it said.
Additionally, by allocating more resources to its production facility in Jawa Timur, Indonesia, the company could potentially enhance the production capacity of its exported canned food to international customers, which may strengthen the company's revenue contribution from exports.
The group noted that exports have contributed to more than 50% of its total revenue in recent financial years.
It said the board will also consider outsourcing certain production to third parties to maintain the minimum headcount in its production facilities.
Rex Industry expects the decommissioning exercise to commence at end-July 2023 and to be completed by the first quarter of the financial year ending June 30, 2024.