Reuters reports first loss

News and information group Reuters today said its five-year turnaround strategy remained on track despite its first ever loss as a public company.

The group reported an interim pre-tax loss of £88m after taking restructuring costs of £156m, including £100m to cover 650 job cuts announced last month.

Chief executive Tom Glocer said trading remained difficult but added he was pleased with the ‘‘resilient’’ performance of the core business.

In October, Mr Glocer announced a five-year strategy to reshape the group to deliver double-digit earnings growth.

He said: ‘‘Six months into this five-year plan, we are hard at work transforming Reuters. We continue to have much work to do, but are pleased with our progress in challenging trading conditions.’’

Mr Glocer reported that Reuters had stemmed the underlying decline in its revenues and delivered margin improvement through ongoing restructuring which has seen Reuters reduce its core workforce by around 2,000 since June 2001.

Shares in Reuters held firm in morning trading today as the company’s figures for the six months to June 30 met City expectations.

The bottom-line loss compares with a pre-tax profit of £357m a year earlier when figures were boosted by £200 million generated from the part flotation of its electronic trading arm Instinet.

In today’s figures, revenues at Instinet collapsed 38% to £301m and contributed to Reuters’ first pre-tax loss since listing in 1984.

Instinet has suffered in the face of increased competition and a slump in stock market trading volumes. That meant the division reported an operating loss of £5m, against a £105m profit last time.

In the core Reuters business, revenues were up 5% at £1.54bn, with operating profits before restructuring ahead 32% at £195m.

The performance was helped by a 7% reduction in costs during the first half of the year.

A further 650 job cuts were announced last month as Reuters looks to reduce costs further in the absence of a sustained market recovery.

As previously announced, the group’s underlying recurring revenue figure is expected to decline by up to 6% in the second half of the financial year.

But the company said it remained on target to record a 12% operating margin for 2002: ‘‘Reuters is committed to its longer-term margin target of 17% to 20% although this remains dependent upon market recovery.’’

Shareholders will receive an interim dividend of 3.85p a share - unchanged on a year earlier.