NEW YORK (AP) â¿¿ Deteriorating financial conditions in Europe are weighing down companies' profits. And hope of salvation from other regions â¿¿ such as China, Brazil and the United States â¿¿ is starting to dim as those economies weaken.
That's the message from this week's parade of second-quarter earnings from some of the world's largest companies.
"The new reality is that this world is not in a normal growth mode," Dow Chemical CEO Andrew N. Liveris said on a conference call Thursday. "And it does not appear that we will see this for at least 12 to 24 months."One CEO after another told investors and Wall Street analysts that Europe was making them nervous. Royal Caribbean CEO Richard D. Fain said, "The steady drumbeat of negative news emanating out of Europe is certainly having an impact." The chief executive of German automaker Daimler AG, Dieter Zietsche, referred to "economic clouds in the sky, which are floating especially over Europe." Europe's debt crisis has worsened over the past few months. Six of the 17 nations that use the euro currency are in recession. Solutions have proven elusive. Because the global economy is so integrated, what happens in Europe doesn't stay in Europe. As Europeans buy fewer cars, for instance, profits of American automakers fall. Ford Motor Co. expects to lose more than $1 billion in Europe this year. Europe's slowdown also hurts factories in China. In turn, those Chinese factories buy less iron ore from Brazil. So, after three years of trying to crawl out from the Great Recession, companies are once again faced with "uncertainty," ''headwinds," the prospect of "slow growth" and any other corporate buzzword you can think of. For many, their prospects aren't looking good. But not every company is so glum. Heavy construction equipment manufacturer Caterpillar reported blockbuster earnings Wednesday, driven in part by companies making long-term investments to upgrade their aging machines.