Reuters shares bounce on Q1 results
16 April 2003 | 4471 views | 0
Shares in Reuters have bounced in early trading after the news and media group reported a 9.1% decline in recurring revenues for the first quarter - defying analysts worst expectations - and released improved market share statistics for 2002.
Reuters' first quarter statement - which excludes figures from electronic trading subsidiary Instinet - shows a 10% decline in core revenue to £670 million and a 9.1% drop in recurring revenue to £624 million.
By 10.30 BST shares in the group were trading at 127.5 pence, 8.2% up on the overnight close of 117.75 pence, but down from an early morning high of 113.5 pence. Analysts were particularly cheered by remarks from finance director David Grigson that the US market for the company's products may have bottomed out.
As fears over the dividend receded, Reuters released internal statistics indicating a growth in market share for the company over 2002. The data, aggregated from over 50 independent sources and proprietary interviews covering thousands of end-users over the last two years, covers approximately 60% of Reuters recurring revenue base.
At headline level, the survey implies that in 2002 Reuters share of revenue increased by two percentage points to 39%. While top-end rival Bloomberg appeared to have increased its share by four percentage points to around 42%, Reuters says both companies have succeeded in taking market share from smaller competitors. The stats indicate that third-placed Thomson Financial kept its share of the market steady in 2002.
Looking at the past quarter in more detail, user accesses stood at 469,000 at the end of the quarter and were down 17% year-on-year. The decline from the end of 2002 was 5%, reflecting the high level of cancellations in December 2002.
Outright revenue, which represents 3% of core revenue, fell 33% to £21 million due to continuing pressure on customer IT budgets and the narrowing of focus of Reuters Solutions business. The firm says it expects to withdraw a further 200 products from production this year, in addition to the 250 already withdrawn from sale.
Reuters says the overall decline in outright revenue masks encouraging progress in key areas of focus. In risk management, 700 positions of a new product, Reuters Kondor Global Limits, have been sold in the first two weeks since its launch, says the firm and a new version of Reuters flagship risk product, Kondor +, will be launched ahead of schedule in the second half of this year.
As anticipated, Reuters net sales performance in the first quarter of 2003 has shown some improvement on the fourth quarter of 2002, although market conditions remain difficult, says CEO Glocer. Looking ahead, Reuters expects the underlying decline in second quarter recurring revenue to be approximately 11% and, assuming no step change in existing market conditions, for the full year decline to be in the order of 10% to 12%