Reuters has reported a pre-tax loss of £88 million for the six months ended June 2002, its first ever as a listed company.
Before goodwill and losses on investments, Reuters made an underlying pre-tax loss of £10 million, against a profit of £227 million pounds a year ago. Group revenues dropped 5% to £1.838 billion, on a 38% decline in revenues at electronic brokerage Instinet, and poor trading in financial markets.
Reuters' loss - its first since listing in London in the mid-80s - is attributed to £156 million in restructuring costs and an operating loss of £61 million at Instinet. Other affiliates’ losses included £21 million from Tibco Software which also took a restructuring charge to trim costs in the face of weak demand.
Tom Glocer, Reuters group chief executive, says: "The combination of a steep revenue decline at Instinet and large restructuring charges across the group has resulted in a pre-tax loss for the first six months. Nevertheless, the core Reuters business has performed resiliently."
Revenue from core operations, which excludes Instinet, rose 5% to £1,542 million (2001: £1,463 million) reflecting the inclusion of Bridge. On an underlying basis, however, Reuters revenue declined 3% in the first half of the year as banking clients deferred spending and cutback on IT projects.
Recurring revenue, which represents 91% of Reuters turnover, fell by 2.7% on an underlying basis in the first half of the year. Revenue from high tier products, including 3000 Xtra, was down just 1% with the beneficial pricing effect of upgrades offset by a reduction in the number of accesses due to cancellations. Outright revenue declined by 10% on an underlying basis as a result of a slowing in the conversion of sales prospects to revenues. Usage revenue nearly doubled over the period reflecting the inclusion of Bridge Trading, but declined by 4% on an underlying basis due to quiet foreign exchange markets.
Glocer says the company is taking a number of steps to improve the competitiveness of its premium products including 3000 Xtra and BridgeStation, through personalisation of the user interface, additional content, investment in improved customer service and the inclusion of Reuters Messaging and trading functionality later this year.
The firm is expecting to make progress in the mid tier market where it is developing a number of products based on a new common technical architecture. This new architecture will enable Reuters to migrate users to the new products and discontinue around half of its current range of over 1000 products, reducing support costs and simplifying development.
Reuters also plans to reduce its dependence on the financial markets by focusing on opportunities in media, commodities and energy markets, and research targeted at the corporate sector. The company says it will continue to dispose of businesses that cannot be grown to scale.