Reuters' profit jumps; merger with Thomson on track
27 July 2007 | 6036 views | 0
News and information group Reuters says its takeover by Canada's Thomson Corporation is on track and could complete this year. The comments come as the UK vendor reports a healthy 19% rise in net profit for the first half of the year.
Reuters CEO Tom Glocer says the company is off to a very good start in planning for the integration with Thomson. He told reporters that initial talks with US and European regulators had been encouraging and that his "working assumption" is that the deal will complete later this year or in Q1 2008.
Glocer also said there were no plans to sell of any of the business ahead of the $8.8 billion merger with Thomson. Press reports surfaced earlier this month saying that Reuters was considering disposing of its fixed income trading platform and Multex databases dealing with Estimates and Fundamentals in order to win regulatory approval for the merger deal.
Glocer's comments come as Reuters reports net profit of £114 million for the six months ending June 30, compared to £96 million pounds a year ago.
But the weak US dollar and other currency effects hit the value of sales and pushed revenues down 0.7% on last year to £1.27 billion. But on an underlying basis, revenues were up 6.4%, with strong sales all three regions, particularly Europe.
Reuters says its Core Plus initiative contributed an extra £27 million of revenue in the first half, the equivalent to 2.3 percentage points of underlying growth.
Revenues in sales and trading fell four per cent to £802 million due to currency changes, but rose three per cent on an underlying basis. Interim profit stayed flat at £118 million compared to H1 last year.
First-half pre-tax profit was up 11% to £136 million, boosted by an £18 million profit from the sale of a stake in a software vendor and partly offset by £3 million share of losses from associates and joint ventures. Reuters says the majority of these losses stemmed from its FXMarketSpace joint venture with the CME. But the vendor insists that trading on FXMS "is gaining momentum" and new customers are being added to the platform.
Commenting on the results Glocer says: "Against the backdrop of the pending Thomson-Reuters transaction, Reuters stayed focused on driving growth in the first half and delivered the strongest six months of sales and installations in more than five years."