KUALA LUMPUR (July 20): Following the closure of British American Tobacco Group's factory in Petaling Jaya, Tien Wah Press Holdings Bhd is planning to stop its printing business in the country held under its wholly-owned subsidiary, Tien Wah Press (Malaya) Sdn Bhd (TWPM).
"Following the cessation of its major customer's operation in Malaysia and [its] subsequent shifts in production facilities to Singapore, Korea and Indonesia, the group acknowledged that there is no requirement for duplication of printing base in Malaysia.
"Hence, [the group] had initiated transfers of its majority production volumes from TWPM to Vietnam and Indonesia to improve its strategic position to service the customer and reduce the group's operating cost over the longer term. The board is of the view that the re-organisation of its production footprint which involves the cessation of TWPM's printing business is therefore timely," Tien Wah's Bursa Malaysia filing read today.
In March last year, British American Tobacco (Malaysia) Bhd announced it would close its factory along Jalan Universiti, Petaling Jaya, in stages — to be completed by the second half of this year — following a challenging business environment. The group said then it would lay off 230 workers.
Tien Wah said the closure of the business will result in 237 employees being made redundant, with an estimated one-off cessation cost of RM12.19 million to be clocked in for the current financial year ending Dec 31, 2017.
The impact of the exercise will result in an 8 sen reduction to its earnings per share and net assets per share, added Tien Wah.
TWPM constitutes about 13.6% of Tien Wah's latest audited net assets of the group as at Dec 31, 2016, and contributed an unaudited 20.1% to its revenue and 11.8% to its profit before tax in the three months ended March 31 this year (1QFY17).
Tien Wah said the proposed cessation is expected to be completed by 4QFY17.
Tien Wah shares slid one sen or 0.52% to settle at RM1.90 today, giving it a market capitalisation of RM275.01 million.