Reuters dives £88m into the red

Nick Goodway12 April 2012

REUTERS, the worldwide finance and news information provider, has unveiled its first loss since it was floated on the stock market 18 years ago. Reflecting the turmoil and loss of jobs in financial markets and its own cost-cutting, Reuters lost £88m before tax in the six months to the end of June compared with a profit of £357m a year earlier.

Total revenues fell 5% to £1.83bn but this was entirely due to its US share trading business Instinet, whose revenues collapsed by 38%. Sales at the core Reuters business rose 5%.

Chief executive Tom Glocer is sticking with his forecasts that recurring revenues, which amount to about 91% of the total, will fall by between 5% and 6% during the second half of the year compared with a 2.7% fall in the first half.

But he warned that the second-half conversion of new sales prospects in the pipeline into outright sales would not be as good as the 7% growth he had hoped for. These will now only match levels achieved in 2001 'as financial services firms continue to postpone IT investment, particularly in the United States'. First-half revenues from investment bank customers fell by 10% with new project sales, which account for only 5% of total sales, falling by a third.

Losses before amortisation, a figure the City tends to focus on, came in at £10m, down from a profit of £227m last time. Earnings on a similar basis fell from 6.4p to 2.2p and the dividend is pegged at 3.85p.

Glocer said Reuters had limited the decline in revenues and improved margins through cost-cutting. Restructuring charges of £156m included £100m for job losses with more than 2,000 people axed in the past 18 months.

'We expect market conditions to remain challenging, but we are taking the tough actions needed to protect our franchise, improve our competitiveness and position us for profitable growth when markets recover,' he said.

Instinet, the electronic share trading platform majority-owned by Reuters, reported a second-quarter loss of $59.9m (£38m) compared with earnings of $40.7m a year earlier. In tumbling stock markets, the firm's equity-based transactions in the US produced 16% lower revenues. The number of shares traded on Instinet grew by 27%, but that was not enough to counter a 35% cut in pricing.

Glocer still waiting on good news at Reuters

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in