KUALA LUMPUR (Aug 28): Audio products manufacturer Formosa Prosonic Industries Bhd (KL:FPI) is selling its factory in Sungai Petani, Kedah, for RM22.1 million cash, as the group consolidates its manufacturing operations in Port Klang to reduce excess capacity and improve efficiency.

The sale is expected to result in a one-off net gain of about RM10.9 million, based on the property's net carrying value and estimated transaction costs and taxes.

The RM22.1 million selling price, arrived at a willing-buyer, willing-seller basis, represents a 15% premium over the estimated market value of the property. Formosa Prosonic acquired the property for RM15 million in 2015.

Formosa Prosonic said in a bourse filing on Friday that it had entered into a sale-and-purchase agreement with Yetta Steel Industries Sdn Bhd for the disposal of its lease interest over the 39,370 sq m industrial land, together with the factory buildings and other structures erected on it.

The property in the Sungai Petani Industrial Area has been operational since 2000 and was primarily used to support production for the group's customers in the northern region.

Formosa Prosonic said it has been gradually shifting manufacturing to its main production facility in Port Klang to reduce excess capacity.

"Having now streamlined most of the production and manufacturing output from Sungai Petani into Port Klang and without any further plans to utilise the facility, the said property will increasingly become idle and excess to capacity," the group said.

Formosa Prosonic added that the disposal will also allow the group to focus its resources on a single manufacturing location, which it expects will improve coordination and utilisation of resources.

Of the RM22.1 million proceeds, RM16.25 million will be used for working capital, including purchase of raw materials, payments to suppliers and staff costs, while RM5.3 million has been earmarked for relocation costs.

The relocation costs include retrenchment benefits for employees who are unable or unwilling to relocate to Port Klang, as well as costs to move machinery, inventory, fixtures and fittings, and to clear and clean the Sungai Petani factory.

The remaining proceeds will be used to cover an estimated RM430,775 in real property gains tax and RM120,000 in expenses related to the disposal.

Yetta Steel is in the manufacture and sale of metal parts and sheets, steel rods, hardware and building materials, as well as transport agency services.

The proposed disposal does not require Formosa Prosonic shareholders' approval, but is conditional upon approval from Perbadanan Kemajuan Negeri Kedah, which owns the land and granted the lease over it.

The transaction is expected to be completed by the first quarter of 2027.

Formosa Prosonic returned to the black with a net profit of RM13.92 million for the second quarter ended June 30, 2026 (2QFY2026), compared with a net loss of RM819,000 a year earlier.

Quarterly revenue jumped 66.7% to RM182.95 million from RM109.78 million a year earlier, driven by higher sales volume and more favourable currency movements.

Formosa Prosonic shares closed unchanged at RM1.15 on Friday, with a market capitalisation of RM310.94 million.