Popular FMCG product manufacturer Rex Group will be shutting its Bukit Minyak production factory and will be laying off some of the staff in the production facility. The group said this was in conjunction with its business rationalisation plan, which is measures to reduce its overall business operating cost as well as improve its financial position moving forward.
In view of this, the company will be decommissioning its production facility in Bukit Minyak Industrial Park, Seberang Perai Tengah, Pulau Pinang. The facility has a total land area of approximately 7.7 acres, in which the company operates the facility for the manufacturing of canned food and drinks. The Company estimates the decommissioning exercise to commence at the end of July 2023 and is expected to be completed by the first quarter of the financial year ending 30 June 2024.
It also said the decommissioning exercise only applies to the factory whereas the warehouse located within the said production facility will be maintained for inventory storage purposes. In addition, the Company also operates 2 other production facilities to carry out its business of manufacturing canned food and drinks in Jawa Timur, Indonesia; and Batu Pahat, Johor.
Accordingly, as part of its plan, the board has also decided to downsize and reallocate the company’s resources from its Bukit Minyak Production Facility to its 2 other production facilities to continue serving the company’s customers moving forward. Additionally, the grooup said by allocating more resources to its production facility in Jawa Timur, Indonesia, the Company may potentially enhance the production capacity of its exported canned food to international customers, which may strengthen the Company’s revenue contribution from exports (which have contributed more than 50% of the Company’s revenue for the recent financial years).
Following the decommissioning of the Bukit Minyak Production Facility, the Company expects to recognise a provision for retrenchment costs amounting to approximately RM2.0 million and other decommissioning expenses which can only determined at a later stage.
