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Reuters raises full year outlook

26 July 2006  |  5039 views  |  0 Reuters logo 2

UK news and information group Reuters has lifted its sales growth forecast for the year after acquisitions boosted revenue in the first half.

Reuters says it now expects full year revenue growth of between five and six per cent after it posted a first half gain of nine per cent. In April the company forecast growth of around five per cent for 2006.

The vendor admits that the improvement is largely driven by recent acquisitions, such as Application Networks, although there has also been increased demand for exchange and specialist data which has resulted in higher-than-expected revenue.

Overall, first half revenue increased 12% to £1.28bn, compared to £1.13bn a year earlier, with £156m of trading profit.

On a constant currency basis, revenue increased by nine per cent. On an underlying basis, which excludes the impact of acquisitions and disposals, first-half revenue increased by five per cent.

Reuters says key drivers of revenue performance were sales of its 3000 Xtra desktop within sales and trading, which rose to £286m, from £248m in H1 2005, helped by upward migration from legacy Trader and Telerate products and a price increase.

But the group's net profit in the first half fell 27% to £96m compared. However Reuters says the year-ago period was boosted by profit from the sale of Tibco and earnings from discontinued operations.

Commenting on the results, Reuters chief executive, Tom Glocer, says it has been an encouraging first half: "As we transition from recovery to growth, we delivered a nine per cent increase in revenues (excluding currency), while strong cost discipline has given us room to invest."

Glocer says as a measure of confidence the group has raised its dividend for the first time in five years. The Interim dividend increased by 6.5% to 4.1 pence a share.

The vendor's Core Plus investment strategy was introduced last year to generate growth following its three year "Fast Forward" cost cutting plan. Core Plus is is expected to contribute one percentage point of the company's revenue growth in 2006.

Reuters says it has invested £35m in its Core Plus initiative, which includes the roll out of a new communications infrastructure across 40 countries as first step towards data centre rationalisation. The vendor also plans to close three major centres and open a new one in Beijing.

The vendor's shares were up 2.30% to 386.50 pence in mid-morning trading.

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