Reuters profit falls ahead of merger

Reuters profit falls ahead of merger

Reuters has posted a 13% fall in full year pre-tax profit in its final set of results as a standalone company, but says indications for 2008 are encouraging despite the uncertain market environment.

The vendor has posted profit before taxation of £273 million for the full year 2007, compared to £313 million in 2006. Reuters says the drop reflects lower profits from disposals than in 2006 when it sold the majority of its stake in Factiva.

Reuters says it saw £6 million share of losses from associates and joint ventures and the main driver for this was FXMarketSpace, the centrally-cleared foreign exchange marketplace it has set up with the Chicago Mercantile Exchange. The vendor's profit was also hit by £45 million in costs related to its merger with Thomson Corporation.

Group revenue for year came in at £2.605 billion - up seven per cent on an underlying basis and 1.5% in actual terms.

Revenue at Reuters' sales and trading unit was £1.67 billion in 2007. This is an underlying increase of three per cent but on an actual basis, currency effects resulted in a two per cent decrease in revenue at the division.

However the unit reported a 13% increase in operating profit to £206 million and was helped by higher sales of Reuters Xtra desktops, which grew an underlying 10% to £1.042 billion. Usage revenues grew an underlying 19%, boosted by increased trading volumes in buoyant FX markets.

But Reuters says its Trader products declined 20% on an underlying basis to £279 million, which reflects customer migrations from legacy products. The Telerate migration is now substantially complete, says the vendor.

Commenting on the results, Reuters CEO Tom Glocer says the group has delivered "a signature final year as a standalone company".

"We set ourselves ambitious goals for 2007, did not waver from these, and despite significant integration activities and a volatile market we have exceeded all our targets," he says.

Looking ahead, Reuters says early indications for 2008 are encouraging despite the uncertain market. The group expects underlying revenue growth in the first quarter of 2008 to be around nine per cent.

The set of results are the last from Reuters as an independent company. Last month regulators on both side of the Atlantic approved Thomson's £8.7 billion proposed acquisition of Reuters, on condition that the companies sell off some of their respective financial data units in order to eliminate competition concerns.

The new company - called Thomson Reuters - will provide full year guidance for the enlarged group with its first quarter results on 1 May 2008.

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