KUALA LUMPUR, Aug 27 – Business analysts say that the worst could be over for the Sime Darby group , the country’s largest conglomerate, following the announcement of a RM77 million fourth quarter loss and RM977 million in write downs yesterday.

The troubled energy and utilities (E&U) division alone reported RM777.3 million in provisions bringing total provisions for the full year to a whopping RM2.1 billion, helping slash 2010 net profit to RM726.6 million, less than half that of analyst forecasts.

Sime Darby also said yesterday that it wrote down RM213 million to cut losses for the Perak groundwater project which did not take off.

“We  are  sanguine  that  the  sad  E&U episode has  truly come  to an end and  ‘all skeletons are out of  the  closet’,” said MIDF in a research report. “Thus we are maintaining our earnings forecast for FY11.”

ECM Libra said that the group’s management gave the “vibe” that the worst should be over for Sime Darby.

“We make no changes to assumptions at this juncture and view that, barring any unforeseen circumstances, forward estimates are achievable,” the research house said in a report.

It added however that the E&U division would likely continue to be a drag on the group clouding the performance of its property, motor and plantation divisions.

Analysts were also upbeat on the move to improve the group’s structure by appointing a CEO and independent board of directors for each of its 5 operating divisions.

“We view this positively as we think it is a move worth trying out, short of a mega demerger,” said OSK Research.

ECM Libra said that given the new move for the Group’s divisions to operate in a more silo basis, a de-merger should be on the cards for Sime Darby.

“We think that ultimately, only a de-merger will see the group realise its true value,” it said. — Reuters