Reuters Holdings Plc has turned in interim figures that were perhaps slightly above expectations, but sluggish exchange rates slowed growth and failed to impress the City. Pre-tax profits climbed 19% to 342m British pounds on revenue up 11% at 1,4 38 pounds, but this was assisted by favorable currency movements to the equivalent of 3%. […]
Reuters Holdings Plc has turned in interim figures that were perhaps slightly above expectations, but sluggish exchange rates slowed growth and failed to impress the City. Pre-tax profits climbed 19% to 342m British pounds on revenue up 11% at 1,4 38 pounds, but this was assisted by favorable currency movements to the equivalent of 3%. But the shares plunged 24.5 pence to 703.5 pence by noon yesterday. The London-based news and information organization had a busy first half. As promised at the full year stage (CI No 2,851), the integrated real-time prices, historical data and complex analytic information system 3000 product range launched on schedule. The new series adds links to Reuters Financial Television, and its on-line database in corporates about 2,500 publications and research information. Chief executive Peter Job said the new series was all about drilling down further into product information. No doubt they will be some deficiencies in the system, but we’ll be working on them, and the next 18 months will be a period of continued investment, he said. The company is continuing to seek ways of returning surplus cash to shareholders, but Job declined to discuss any details surrounding the ‘problem.’ It’s proving difficult and I don’t want to say any more, but added the situation should be cleared up by the end of the year. Similarly, he refused to comment on a litigation issue that finance director Rob Rowley insinuated had cost the company a significant sum. First half costs were up 9% at actual exchange rates, compared to 1995 interim figures when costs rose 18% on revenue growth of 19%. In terms of products, Reuters said margins across the board showed improvement, but in general the second quarter turned in a weaker set of figures. Transaction Products, which include Instinet, continued to be the fastest-growing product line with revenue up 28% to 405m pounds in the half. Revenue from the Dealing 2000 product line grew 15% and by June 2000-2 h ad 5,150 user accesses installed over 1,000 in 28 countries. Reuters blamed hampered progress on the sluggish currency market, but said in the last few months the markets has picked up slightly, to put the company back on course to achieve 40,000 trades per day. Information Products revenue, up 6% on last time to 955m pounds, was slowed by the continued effects of consolidation among its clients. Recurring Information Products revenue growth derived mainly from the sale of data feeds and business information products. Revenue generated from the new risk management products is not yet significant, but the outlook is promising. A rise of 5% from Media Products to 78m pounds was partly attributed to the divestment of 80% of London News Radio, and Job said the year’s revenue for the division would be adversely affected to a certain extent, due to the discontinued line. Instinet improved margins to 39% from 28% on revenue up 113% to 67m pounds but because revenues are received on a daily basis Job said it was impossible to forcast full year performance. Tibco was less successful and saw a 10% drop in revenue to 7m pounds. A 19% drop in revenue to 17m pounds from the Americas, excluding Instinet and Tibco, was attributed to continued investment in infrastructure, but Rowley said the company has decided to continue to invest in the area dispite the poor returns. Head count has fallen 20% to 200 and some sites were closed to reduce overheads. The company declined to give any indication on full year performance. An interim dividend of 2.75 pence is to be paid, up 20%.