Originally created 02/13/98

Crisis has worldwide impact



NEW YORK -- From banks to brewers and telecommunications giants to petrochemical concerns, companies around the globe are suffering because of the Asian financial crisis.

Just like their U.S. competitors, European, Latin American, Canadian and Australian companies heavily involved in Asian countries are seeing earnings pinched.

Big name multinationals like Royal Dutch-Shell, Germany's Deutsche Bank, Dutch beer maker Heineken and Canada's Seagram are already reporting lower earnings or predicting them for the months ahead. Smaller companies, ranging from Chilean copper producers to Danish clothing makers and Mexican glass manufacturers, also are being hurt.

"It's a global phenomenon," said economist David Hale at Zurich-Kemper Investments in Chicago.

Now, companies elsewhere are releasing similar results.

On Wednesday, Royal Dutch-Shell, the Anglo-Dutch oil and natural gas giant, said its October-December earnings tumbled 32 percent, partly due to lower oil prices and the Asian turmoil. Prices for crude oil have plunged in recent weeks because of overproduction by the Organization of Petroleum Exporting Countries and lower demand from Asian countries.

"Any multinationals who ... have seen a large part of their growth in revenues in recent years coming from sales to Asia will be hit because of the drop-offs in demand," said economist Devi Aurora at Standard & Poor's DRI in Lexington, Mass.

As the economies of Thailand, Malaysia, South Korea and Indonesia -- hardest hit by the crisis -- are slowing, governments, businesses and consumers have less money to spend on everything from pricey construction projects to inexpensive household goods.

At the same time, Asian companies, because their local currencies have fallen sharply against the dollar, the British pound and other major currencies, will be able to sell their products more cheaply abroad, giving them a competitive edge. European and other non-Asian exporters will likely find it harder to peddle their goods.

Analysts are expecting a wide range of global companies to feel the squeeze, from banks and financial services companies to exporters of chemicals, autos, steel, ships, computers and agricultural products. Airlines and tourism companies, too, are seeing a drop-off in business in the region.

European banks are particularly vulnerable.

Standard & Poor's, the credit rating agency, recently estimated European banks had rung up as much as $130 billion in loans to banks, government agencies and businesses in Thailand, South Korea, Malaysia and Indonesia.