Sime Darby: Qatar project going well

  • Business
  • Thursday, 17 Apr 2008

PETALING JAYA: Sime Darby Bhd yesterday refuted claims that a unit incurred cost overruns amounting to millions of ringgit on work at an offshore engineering project in Qatar.

“Work on the project is ahead of schedule and is being carried out within contracted terms,” the company said in a one-page statement yesterday.

The statement said a few media organisations had reported earlier that the project had incurred cost overruns of RM120mil to RM150mil.

“These reports are inaccurate,” Sime Darby said, adding that its unit, Sime Darby Engineering Sdn Bhd, “would like to state that there are no cost overruns with regard to its on-going project with Maersk Oil Qatar.”

Last February, Maersk Oil awarded Sime Darby Engineering a contract to build and install a process platform, a utility platform and three bridges off the coast of Qatar.

The offshore engineering, procurement, construction, installation and commissioning project was awarded for US$600mil (RM2.2bil).

The statement said Sime Darby had already made provisions for higher costs of raw materials such as steel with regards to all its projects and did not foresee the need for any further provisions in the financial year ending June 30 (FY08).

“Given the present scenario, Sime Darby does not anticipate any impact on the group results for FY08,” it said.

Shares in Sime Darby rose 20 sen, or 2.2%, yesterday to RM9.20 on volume of 16.5 million shares.

Meanwhile, a number of brokerages yesterday made fresh updates on Sime Darby following clarification from the management on the cost overrun.

The reports said the current order book of Sime Darby’s oil and gas division currently stood at RM1.4bil, with the Qatar project 50% completed. The Maersk Oil project is targeted for delivery in October next year.

The consensus forecast is for Sime Darby to make a net profit of around RM3.5bil, or 58 sen per share, in FY08.

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