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Job Cuts Mount, Dubai Port Freezes Growth | ASHARQ AL-AWSAT English Archive 2005 -2017
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DUBAI/AMSTERDAM, (Reuters) – Major European employers including Philips and ING announced thousands of job cuts on Monday and Dubai container port operator DP World halted all development as the downturn bit.

News that a giant $68 billion takeover of U.S. based Wyeth by world number-one drugmaker Pfizer was close offered evidence that big corporate deals can still be done .

And shares in British bank Barclays, hammered over the last two weeks, leapt after it said its projected 2008 pretax profit of more than 5.3 billion pounds ($7.3 billion) would include the impact of 8 billion pounds in gross writedowns.

But an International Monetary Fund official warned at the weekend that global growth was set to slow further.

DP World, one of the world’s largest container ports and a key indicator of growth in the Gulf, said on Monday it was reviewing all expansion projects, cutting costs and freezing recruitment as growth slows in 2009.

“The management has initiated broad measures to cut normal costs like travel … There is a general freeze on recruitment and a close review of replacements as far as headcounts are concerned,” said Chief Financial Officer Yuvraj Narayan.

DP World, which operates 48 marine terminals and 13 new port developments in 31 countries worldwide, posted a 122 percent increase in first-half profit as recently as August and had said business was accelerating in the second half as emerging markets trade mitigated a global economic downturn.

Emerging markets have since been pulled down by crises elsewhere, and Narayan said the bullish outlook had changed.


Banks have borne the brunt of the credit crisis, which was sparked by mass defaults on U.S. home loans. The sector has seen a wave of consolidation as leading banks around the world have collapsed or been taken over.

On Monday, French bank BNP Paribas predicted a net loss of around 1.4 billion euros for the fourth quarter alone while rivals Societe Generale and Credit Agricole responded to the uncertain environment by deciding to merge their asset management divisions.

SocGen and Credit Agricole said the merger of their asset management businesses would lead to a new, top 10 world player in the industry with 638 billion euros ($826.5 billion) of assets under management.

Barclays almost epitomised banking’s malaise, its shares losing more than two-thirds of their value over the last two weeks, despite its insistence it was set for big profits.

Chairman Marcus Agius and Chief Executive John Varley said in an open letter to customers and shareholders that, net of its own credit, hedging and attributable income, the bank’s writedowns for the year would be about 5 billion pounds.

“These figures demonstrate that although we have been heavily impacted by the credit crunch, our income generation was at a record level in 2008 and has enabled us to withstand this impact and still produce strong profits,” they wrote.

“Writing in this way ahead of the release of results is unusual, of course, but the turn of events is also unusual,” they wrote.

Barclays shares shot up 23 percent in response.


In Amsterdam, Philips Electronics swung to a fourth quarter net loss and said it would cut 6,000 jobs, while Dutch financial group ING revealed plans for 7,000 job losses as it took a 2008 loss of 1 billion euros ($1.3 billion) and tapped into 22 billion euros of Dutch state loan guarantees.

Corus, Europe’s second-largest steelmaker, is expected to announce plans to axe up to 2,500 jobs in the UK as early as Monday according to a BBC report.

The French state plans to inject 5 billion euros ($6.5 billion) into banks with the aim of financing airplane purchases to help European planemaker Airbus, a French government source said on Sunday.

Japanese stocks closed at their lowest in almost three months on Monday, while the dollar gained against the euro and sterling as investors shunned risk, and oil prices fell on forecasts of a deepening global downturn.

However European shares gave up early losses to turn higher, led by a surge in ING on hopes the new state guarantees will bolster its finances and as Barclays flagged a strong start to the year.