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Reuters FX Grows but Dollar Dampens Revenues

Reuters Group had strong underlying growth in its transaction systems division, which realised a 32% gain in first quarter 2007 compared with Q1 2006, even as US dollar weakness threw a dampener on overall revenues.

 

Transaction systems strength was driven by strong foreign exchange markets, the company said in its first quarter results. Usage revenue was 24 million, with revenue from Reuters Conversational Dealing at 62 million, an underlying increase of 4% which reflected growing user numbers in both established and emerging markets.

 

Reuters also noted increased usage from Reuters Dealing Matching system and credited good early progress with FXMarketSpace, its FX trading joint venture with Chicago Mercantile Exchange.

 

Reuters total revenue of 626 million for the quarter showed on an actual basis a decline of 1.1% resulting principally from the weak US dollar.

 

Tom Glocer, Reuters Chief Executive, says: “Our first quarter results confirm that we have made a strong start to 2007. Reuters continues to benefit from the focused investment we announced with Core Plus, the early indications from FXMarketSpace are encouraging, and we are well-positioned to deliver on our full-year expectations.”

 

Currency had a negative effect of 7.6 percentage points year-on-year during the first quarter. This was driven by the weakening against sterling of the US dollar (by 12%), euro (2%) and yen (13%). During the first quarter, the US dollar accounted for 47% of Reuters’ revenue, the euro for 25% and the yen for 5%.

 

At current exchange rates with the current mix, a $0.05 weakening in the average annual exchange rate of either the US dollar or the euro against sterling would decrease Reuters’ annual trading profit by approximately 10 million, and vice versa.

 

In other divisions, Research & Asset Management revenues were up by 24% underlying due to good sales of Reuters Knowledge, and Enterprise Information revenues increased by 15% underlying, largely due to demand for datafeeds to support business automation and STP.

 

Reuters Core Plus initiatives in electronic trading, new content, enterprise solutions and new markets realised 15 million.

Profit & Loss

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