Is the worst over for Sime Darby?

Several steps are needed for a return to confidence, the first being the unvarnished truth. One of the best ways to kill the reputation of a company is to let the bad news dribble out in bits and pieces. What that does is to keep the investing public in a constant state of tension wondering what’s round the corner, bleeding confidence.

Sime Darby found out – yet again – that’s not good for the share price which tumbled in the wake of rumours that it may need to provide as much as RM2.5bil to RM3bil for its final quarter to June 30 and wiping out profits for the full year. All Sime Darby said late Thursday was that it would still be in the black when it reports its results later this month. That’s some, but scant, consolation and what anyone will read between the lines is that Sime Darby will make some provisions but not as much as the rumours envisaged it would.

So the latest guessing game in town is how much more provisions Sime Darby is going to make and for which project or projects. If those questions are not answered satisfactorily – and soon – then expect continued uncertainty in the share price and prolonged depressed valuations, especially given its recent already tumultuous history.

Read More >> The StarBiz, Saturday August 7, 2010

2. ‘Kitchen-sinking’ at Sime Darby by new CEO

PETALING JAYA: Within a mere 20 days of being in office, Sime Darby’s new chief executive Datuk Mohd Bakke Salleh has been actively carrying out a “kitchen sinking” exercise in the group to ensure that all cost overruns and questionable claims are provided for in the group’s fourth quarter results, reliable sources said.

“Since coming in, Bakke has been digging into the books, scouring the group’s past dealings. “You would only expect him to do so. “New CEOs tend to kitchen-sink to start from a clean slate,” said a source familiar with the workings of the group. Sime Darby has yet to respond to queries from StarBizWeek on this.

Bakke was appointed as acting president and group chief executive on July 15, replacing Datuk Seri Ahmad Zubir Murshid, who had earlier been asked to take a leave of absence in relation to losses stemming from Sime Darby’s engineering and utilities (E&U) division. Sources said that there were likely to be provisions to the tune of at least a RM100mil coming from projects already provided for or from a newly secured Indian project.

It is understood that in January this year, Sime Darby, together with Singapore-based Swiber Holdings Ltd, had won a contract to build offshore platforms for Oil & Natural Gas Corp in India. The deals cover engineering, procurement, construction, installation and commissioning work. Work has commenced and is expected to be completed by the second quarter of 2011. It is possible that Sime Darby had under-bid for their portion of this contract, not unlike what it is believed to have done in the other E&U projects for which it has provided for


Read more >> http://biz.thestar.com.my/news/story.asp?file=/2010/8/7/business/6816218&sec=business