Grim corporate figures underline global crisis

AFP

Posted at Feb 06 2009 07:05 PM | Updated as of Feb 07 2009 03:05 AM

TOKYO - Grim corporate earnings data from the world's biggest automaker and thousands of job losses underscored Friday the urgency driving debate over Washington's massive economic stimulus plan.

Japan's Toyota Motor forecast an operating loss of $4.9 billion for the financial year to March, after already losing $4.0 billion in the third quarter alone as the global crisis sends car sales plunging.

British Airways, Japan Airlines and a clutch of other big corporate names announced or forecast dismal figures, and thousands more jobs are to face the axe across the world as companies try to make ends meet.

The slew of red ink and job cuts underlined the sense of emergency behind the US government's attempts to pass a $900-billion stimulus plan, which it says is needed to kick-start the faltering economy.

Negotiations to pass the bill entered their final stretch late Thursday as the Senate wrapped up a fourth day of debate.

"I would hope that we can complete this legislation tomorrow. I have hopes and I'm cautiously optimistic that we can do that," Democratic Senate Majority Leader Harry Reid told colleagues late Thursday.

Reid said he was waiting for the result of behind-the-scenes efforts by a group of moderate senators from both parties to forge a deal to win votes from Republicans, whose leaders say the bill is bloated and needs more tax cuts.

The plan attracted international controversy because of its "Buy American" clause, which forbade stimulus spending on a project unless all of the iron, steel and manufactured goods involved were made in the United States.

Senators diluted the contested clause by saying it must be applied in line with US international trade agreements, but did not remove it.

Separately, the US Treasury Department confirmed a new bank stabilization plan would be unveiled Monday by Secretary Timothy Geithner, but offered no details.

In London, British Airways reported a net loss of $186 million over the first nine months of its 2008-2009 financial year.

Japan Airlines, Asia's largest carrier, said it expected a net loss of 34 billion yen ($374 million) in the year to March, while truckmaker Isuzu skidded into a 15 billion yen loss for the year.

Japan's Sharp Corp. said it was eliminating 1,500 jobs and that it expected an operating loss of 30 billion yen for the year to March 31 -- its first ever loss and a steep reversal on a previous forecast of a 130-billion-yen profit.

It said top managers would also accept pay cuts and forego bonuses.

Earlier, News Corp. reported a huge $6.41 billion quarterly loss and chairman Rupert Murdoch said the dismal economic climate would force job cuts at his sprawling media empire.

In Russia, the world's largest aluminium producer Rusal said it would slash production by 11 percent and cut five percent from its 90,000-strong workforce to save costs.

Electronics company Amkor Technology Inc. laid off 1,500 workers from its two plants in the Philippines due to declining orders.

The cuts are the latest blow to the Philippines' once-booming electronics sector which has slowed since accounting for over 60 percent of the country's exports between August-November 2007.

The International Monetary Fund warned the US housing downturn may deepen and last longer than previously forecast, and the slump could spread to other countries.

The Bank of England cut its key lending rate by half a point, taking rates to 1.0 percent -- the lowest level in the bank's 315-year history.

Faced with a risk of deflation and with the economy in its first recession in 18 years, the central bank extended a series of drastic cuts since October, when interest rates had stood at 5.0 percent.

"The global economy is in the throes of a severe and synchronized downturn," the Bank of England explained.

The cut was in line with expectations and came shortly before the European Central Bank froze eurozone borrowing costs at 2.0 percent ahead of a likely rate cut in March.

The major Asian markets were up Friday. Tokyo closed up 1.60 percent while shares in Hong Kong were up 1.42 percent in afternoon trading.