Bad news as poor growth hits Reuters
Shares in Reuters fell by more than 5 per cent yesterday as City followers were unimpressed with the media company’s failure to raise its second half growth forecasts.
The company’s stock fell as much as 20p to 346p in early trading before recovering slightly.
The data and news provider reported an underlying 1 per cent gain in quarterly subscription revenue in its third-quarter trading statement yesterday.
It also repeated a July forecast of 1 to 2 per cent underlying growth in recurring revenue for the second half.
Analysts characterised these growth figures as solid and unspectacular.
A note from Numis Securities said: “The group is not changing its H2 guidance for growth of 1 to 2 per cent, which we believe will be taken as a slight disappointment by some, given the strong current momentum in the financial services industry.”
Reuters has only just returned to underlying growth after four years of decline, and investors had been looking for evidence that the recovery was gaining momentum. Total third quarter revenue was £611m, up 8 per cent, including acquisitions, from £566m a year ago.
Chief executive Tom Glocer said: “Today’s results reflect a solid third quarter performance for core business. We have further enhanced the core by releasing significant product upgrades this quarter.”
Reuters said it had a third consecutive quarter of positive net sales, which are a leading indicator of revenue.
Reuters bought Swedish macroeconomic data and analysis group EcoWin for about $40m (£22.4m) in cash earlier this month. Glocer said EcoWin was just one of the new products and improvements that Reuters was offering.
He said: “We are boosting our content by agreeing to acquire EcoWin with its in-depth macroeconomic data, adding liquidity to our fixed income and foreign exchange trading systems and making progress in emerging markets such as China and Brazil.”
Glocer declined to forecast 2006 revenue until February, but said that nothing had changed since July when the company said it expected 5 to 7 per cent annual revenue growth by 2008.