European firms ready to feel the pinch

FRANKFURT - Deutsche Telekom AG and Pernod Ricard SA are among companies bracing for shrinking demand as Greece, Spain, Portugal and Ireland tighten their belts to slash budget deficits.

Austerity programs in these countries may deepen slides in revenue in the region for companies already facing a fragile rebound. For now, executives at 67 percent of 18 large European companies surveyed by Bloomberg say they see revenue this year from these countries unchanged or slightly better than in 2009. Still, declines in incomes and spending, already evident late last year, will worsen, some company officials said.

"In the second half, household income in the region did go down, many moved to prepay and they became more price sensitive," Guido Kerkhoff, a board member at Deutsche Telekom, the biggest shareholder of Greece's Hellenic Telecommunications Organization SA, said, alluding to south and eastern Europe. "Customers will be more cautious than before."