Singapore companies report big losses amid recession

Special Report:Global Financial Crisis

SINGAPORE, Feb. 11 (Chinese media) -- The current economic downturn is taking its toll on Singapore's economy with local giants posted huge losses in their profits during the fourth quarter of 2008, bringing up more concerns over the country's economic outlook.

The country's two state-owned investment companies have not been spared from the crisis.

According to official data announced on Tuesday, Temasek Holdings saw its investment portfolio value fell 31 percent to 127billion Singapore dollars (about 85 billion U.S. dollars) as of Nov. 30, 2008, down 58 billion Singapore dollars (about 39 billion U.S. dollars) from 185 billion Singapore dollars (about 123 billion U.S. dollars) eight months earlier.

Meanwhile, the Government of Singapore Investment Corporation (GIC) also reported a decrease in its investment value last year. The government said the GIC has invested billions into stakes in Citigroup and UBS, but it said the company's loss is much less measured against other indexes.

Situations were not going well either for local blue-chip companies as more bad news poured in on Tuesday.

In the telecommunication sector, the country's biggest telecom Singapore Telecommunications (SingTel) said that its net profit declined 16 percent to 799 million Singapore dollars (about 533 million U.S. dollars) in the fourth quarter of 2008 over a year ago.

In the transportation sector, Singapore Airlines registered a 42.8 percent drop in net profit in the fourth quarter of 2008 due to weaker passenger and cargo carriage as well as foreign exchange movements. The airline said it earned a net profit of 337 million Singapore dollars (about 225 million U.S. dollars) from October to December 2008, down 253 million Singapore dollars (about 169 million U.S. dollars) over a year ago.

Singapore's container shipping and logistics group Neptune Orient Lines (NOL) reported on Tuesday a net loss of 149 million U.S. dollars in the fourth quarter of 2008. And it posted a staggering drop of 84 percent in net profit during the whole year of 2008.

Although local banks have not released their quarterly reports, chances are that they may ring the alarm as well. According to a study by financial services company Credit Suisse in early February, Singapore's banks are expected to see profit earnings reduced by 31 percent in the fourth quarter of 2008 as they are facing slowing loan growth, mounting losses from bad debts and falling fee income from slumping capital markets. DBS, Singapore's biggest bank by assets, has already warned that the fourth quarter earnings will be lower compared to the third quarter.

Despite disappointing figures in investments and profit earnings, the Singapore government and some business leaders said they are confident about long-term performances.

Senior Minister of State for Finance Lim Hwee Hua said the government believes Temasek and GIC have the ability and resources to weather the ups and downs over multiple economic and market cycles and will continue to deliver good long-term returns.

Chua Sock Koong, SingTel's Chief Executive Officer said, "With the current economic uncertainties, the group will continue to be vigilant and disciplined in our business decisions and leverage our vast experience to improve business performance."

But according to a recent survey, the country's economy is likely to shrink further in the near future.

Local English newspaper the Business Times said on Monday that with business prospects hitting lows not seen since 2001, the economy could contract between 4.5 percent to 5.8 percent in the first quarter of 2009 on year.

Singapore's Ministry of Trade and Industry (MTI) said in January that the country's gross domestic product (GDP) growth is likely to be between minus 5.0 percent and minus 2.0 percent in 2009.