Falling revenues at Instinet help push Reuters £88m into the red

Reuters, the news and information provider, yesterday recorded its first loss in its 18 years as a publicly quoted company after a sharp fall in revenues at its Instinet electronic brokerage division and £156m of exceptional charges.

Group pre-tax losses were £88m for the six months to June with the Instinet division falling £5m into the red after a 38 per cent fall in revenues.

Reuters has been hit hard by the fall in markets and the retrenchment by the world's largest investment banks, which have been cutting jobs and orders for the group's terminals, where subscriptions cost about £800 a month.

The company said the outlook remained uncertain and that it expected revenues in the second half to fall by 5 to 6 per cent. Conversion of sales prospects to definite contracts had slowed, it said, as financial services companies continue to postpone IT investment.

Tom Glocer, chief executive, said: "We expect market conditions to remain challenging, but we are taking the tough actions needed to protect our franchise, improve our competitiveness and position us for profitable growth when markets recover."

Reuters has already announced plans to shed 2,750 jobs as its seeks to streamline its operations to cut costs. The business said its re-structuring programme should save it £335m in 2003. Margins from the core business should be 12 per cent this year with scope for growth beyond that, the company said.

Nicola Stewart, media industry analyst at WestLB Panmure, said the losses were generally in line with expectations. "On a straightforward operating basis, it's not that bad," she said.

Alex de Groote at Credit Agricole said the company's key client base, the financial services industry, shows "no sign of recovery yet".

Reuters is looking to broaden the appeal of its services to make them attractive to different audiences. Its premium product is the Reuters 3000 Extra Service, which is aimed at investment banks. The group has also developed its Reuters Investors system, an internet-based service aimed at high net worth individuals who pay fees each time they access the service. Reuters said the web site was achieving 3m hits a day, generating £50m a year of revenue.

The company is also seeking to offer consultancy services to clients to help them integrate Reuters' systems and data into their own networks.

The company floated Instinet in May last year but has retained an 83 per cent stake, falling to 62 per cent in June. Reuters shares edged a penny higher to 300p.