News agency Reuters exceeded market forecasts today with a return to underlying profit for the first half despite a 10 per cent fall in core subscription revenues.
The world's largest listed provider of news and market data to financial institutions also narrowed its full-year 2003 forecast to a fall of around 11 per cent in core subscription revenues. Earlier, it had estimated a fall of 10 to 12 per cent.
Reuters, which has been cutting costs, reported pre-tax profit before goodwill amortisation and exceptional items of £87 million sterling for the six months ended June 30th, compared with market expectations of about £42 million and a loss a year earlier of £10 million.
Core subscription revenues totalled £1.255 billion, in line with market forecasts, and core operating margin before restructuring costs was above forecasts at 14.7 per cent.
Reuters core revenues are generated overwhelmingly by sales of information-screen subscriptions to banks, brokerages and fund managers worldwide. They have been falling for the past 18 months as its major clients slash costs to cope with a severe downturn in stock markets over the past three years.
Reuters shares have plunged since peaking at over £17 per share at the height of the high-tech bubble in March 2000, but they have more than doubled since touching a 17-year low of 95-1/4 pence about four months ago on hopes for a recovery. Reuters shares closed yesterday at 218 pence.
The company also announced today two contracts at Wall Street investment banks Goldman Sachs and Lehman Brothers. Reuters' major rival is unlisted US firm Bloomberg LP, founded and controlled by New York mayor Michael Bloomberg.
The signs of revival in investment banking, and a strong rally in stock markets since mid-March, have also led some analysts to raise their revenue estimates for the core Reuters business, breathing more life into the stock.