Reuters continues the process of polishing its somewhat tarnished image by announcing a pre-tax profit for 2003 of 49 million, compared to a loss of 493 million in 2002. However, operating profit of 174 million declined by 11% compared to 2002, largely due to restructuring charges, Reuters says.
The company announced 18,000 additional positions of Reuters 3000 Xtra sold to “premium users” during 2003, of which 7,000 were new businesses (as opposed to upgrades), as well as an acceleration of the 3000 Xtra installation rate in Q4 which followed the launch of a thin client version which targets smaller institutions such as hedge funds. There were also 800 positions of the Trader and Knowledge systems sold since October.
Notably, while usage revenue was 103 million, down 15% compared to 2002, Dealing Matching revenues saw a year on year underlying growth of 20%, which the company says was driven by spot and forward volatility in the FX markets, product enhancements and a successful sales campaign to attract euro/dollar liquidity.
Premium tier revenue, which includes 3000 Xtra, BridgeStation and Dealing, was 730 million, up 10% year on year, and 2% from the previous quarter. The rate of decline in Dealing accesses slowed in Q4, reflecting the lower levels of head count reduction on FX desks, Reuters claims. The premium tier is now nearly a quarter of the total user base, compared to 19% at the end of 2002, the company says.
Revenue from the Treasury division was 1,018 million, down 10% on an actual and an underlying basis, with Reuters committing itself to sales, marketing and development activity in an attempt to reverse the decline. The company says that new business opportunities are also opening up, and reports a growth in risk revenue to 86 million, as well as a 25% increase in the client base of Reuters Electronic Trading, bringing its number of clients to 60. It has been more than a year since Reuters absorbed AVT Technologies, so the figure represents actual growth, rather than clients that the UK-based platform vendor brought with them, a spokesperson observes.
“In the core business, we have made good progress towards becoming more competitive, less complex, more service orientated and more efficient,” says Tom Glocer, chief executive. “We maintained cost discipline and generated sufficient earnings and cash flow from the core business to cover the dividend. We further simplified our group portfolio and generated cash through the recent sell down of our stake in Tibco.
“We are only one-third of the way through our Fast Forward transformation programme, so a lot of work remains to be done,” he continues. “The progress we have made on our product line, customer service levels and cost base confirms that the expected benefits are starting to come through.”