Higher than expected spending on Reuters' Fast Forward restructuring programme has taken the shine off an otherwise positive set of results for the news and information group.
Group operating profits at Reuters jumped 52% to £198 million pounds for the year ending December 2004, against £130 million in 2003. Recurring revenue at £2164 million was down 11.9% of which 4.5% was due to currency movements. The underlying decline reduced to 5.4% compared to 10.2% in 2003.
Despite the improvements, the shares slipped back below the 400 pence mark in early trading as analysts expressed reservations about an apparent slowdown in cost-cutting. In a conference call, Reuters CFO David Grigson said the group would deliver £105 million of savings in 2005 - about ten per cent below expectations - and incur a higher restructuring charge of £80 million to cover the costs of moving from Fleet Street to London's Docklands.
To achieve CEO Glocer's projected target of £440 million in cuts, Reuters will have to find an additional £100 million of savings during the final year of the Fast Forward programme in 2006.
Analysts were also discomfited by the lack of further news on Reuters' sale of its Radianz unit to BT, and plans to sell off electronic brokerage Instinet.
Grigson told reporters on a morning conference call that some of the savings have been pushed back because of delays in finalising the Radianz deal.
He also dampened expectations that Reuters would use the windfall proceeds from disposals to return cash to shareholders.
"We've got a lot of work to do to hit the Fast Forward savings target and our revenues are still in decline," he says.