Details of LOD from Nestle CENTURY was slapped with a Letter of Demand amounting to RM21.6m from Nestle for purported losses and damages. We understand that the claim arose from extra costs incurred as a result of CENTURY being unable to handle a bigger-than-expected container volume from Nestle. To recap, Century took over the logistics services for NESTLE back in end-2013 after the previous service provider was dismissed. We believe it was a case of mis-communication where both parties did not sign any mutual agreement or contracts prior to the commencement of service, which resulted in Century’s lack of information on the container volume which subsequently caused a disruption to Nestle’s production. We were negatively surprised by the development as the demand came more than 18 months after the initial tie-up. The impact could be significant as the amount of RM21.6m represents >75% of our projected FY15 net profit. Apart from that, we also think that the demand, if successful might dampen the Group's chances of securing more logistics contracts in the future. On the bright side, CENTURY does not have any ongoing contracts with Nestle at the moment after having served NESTLE for c.15 years until end-2013, thus the risk of revenue loss is nil. We understand that CENTURY has lined up a counter-claim against NESTLE for defamation and we think the dispute might drag on for a long period of time before it is resolved.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
DDK
70 posts
Posted by DDK > 2015-11-26 13:44 | Report Abuse
Wait for annoucement