Reuters Holdings Plc’c chairman Peter Job yesterday spelled out his objectives for the future of the company, while warning of a continuing slowdown in revenue growth in the second half. Speaking in New York, via a satellite link to London, which did work this time, his foremost objective was to make Reuters the number one […]
Reuters Holdings Plc’c chairman Peter Job yesterday spelled out his objectives for the future of the company, while warning of a continuing slowdown in revenue growth in the second half. Speaking in New York, via a satellite link to London, which did work this time, his foremost objective was to make Reuters the number one company in the financial community in all the countries and all the market segments in the world where it can make money. He said that this was already the case in quite a few countries but he added that it would be unambitious of us to put up with this position. Pre-tax profits for the six months to June 30 at the London-based news and information organisation were up 18% at ú288m from turnover that rose 19% to ú1,295m. The revenue growth was up 18% at comparable exchange rates or 15% excluding acquisitions made since the start of 1994. Job said that he expected a slower rate of double digit growth in the second half compared with the first. This was due in part to a lack of one-off benefits from acquisitions and a slowing down in level of new orders, particularly from recurring revenues in information products, according to finance director Rob Rowley. Job added that there was quite a lot of merger activity among its clients in countries such as the UK, Japan and Finland, as companies tried to cut costs. He said that the company had seen this happen before in the early 1990s, and was ready with the right products. However he wanted to discourage the suggestion that there is a killer product out there; it’s an incremental process. Job said in his statement that market conditions were not currently good enough to assure us of continued double-digit growth next year. The downbeat trading statement caused shares to drop by 3% despite figures higher than analysts’ forecasts.
A lot of mist
Transaction products are still the fastest growing product line; revenues up 26% to ú317m in the half. The Dealing 2000-2 foreign exchange product achieved its target of 20,000 matches a day in June and Job said the target was now double that. He said it had had a very big uptake in eastern Europe and Russia. Dealing 2000-1, the conversational foreign exchange dealing product, hit a record of 1.9m conversations a week in March. Information product revenues grew 17% to ú904m in the half, and excluding acquisitions the growth was 13%. Media product revenues were up 11% to ú74m in the half, after a slow first quarter was compensated for by a strong second. Job’s objective for the media was to operate profitably as the leading source of international news for the world’s media and for the emerging new media reaching the home. He said the media were a tougher nut to crack with high costs and fixed contracts, but the company would have a go nonetheless. He said that it was still early days in the on-line business, and a lot of mist has to clear from the scenery before Reuters fully declares its hand. His third objective was to create a third global business supplying information to managers and professionals outside finance and the media, but few details were forthcoming. In paying an interim dividend up 21% at 2.3 pence, Rowley said that Reuters was continuing its policy of paying dividends two to three pence higher than earnings per share. Asked why this year will be down on last year, Job replied that you don’t repeat good years all the time.