Stemming the slide

27 October 2003 By Fiona Maharg-Bravo

It is good news that the information group’s costcutting is on track. It is even outstripping the decline in sales. But that can’t go on forever. Reuters has got to stabilise revenues. The worry is that it can’t predict when that will happen.

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Reuters recurring revenue fell just under 11% to £609m in the third quarter of 2003 compared to the same period in 2002. This was slightly ahead of expectations and driven by a reduction in the overall rate of net cancellations for the third consecutive quarter. The information provider upgraded its expectations for recurring revenues to be down 11% for 2003 as a whole or slightly better. It also said it remained confident of exceeding its 2002 operating margin of 13.1% this year.

Reuters confirmed it would deliver £55m of net cost savings from its Fast Forward restructuring programme. As part of the programme, Reuters announced last month it would be transferring its global software development operations from 18 cities around the world to four new hubs. It is also planning to relocate the majority of London staff to Canary Wharf in 2005. Reuters also announced earlier this month it would reduce its 49% stake in Tibco Software, worth about $600m.

Despite announcing new business wins from Fidelity and Goldman Sachs in the US, the outlook in Europe is less rosy. Tom Glocer, chief executive, said: I don't yet see enough real evidence in the sales figures to say that we have turned the corner in Europe.

The company said it would give guidance on its outlook for the first quarter of 2004 in January.

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