£440m cost-cutting plan at rejuventated Reuters will take longer than envisaged

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The Independent Online

Reuters reported yesterday that underlying profits for last year had soared by more than 50 per cent but the financial information giant warned that it would take longer than expected to complete its massive cost-cutting programme.

Reuters reported yesterday that underlying profits for last year had soared by more than 50 per cent but the financial information giant warned that it would take longer than expected to complete its massive cost-cutting programme.

The company revealed that it would take up to a year longer to finish its restructuring initiative, known as Fast Forward, which had aimed to deliver £440m of savings by the end of this year. Reuters also said that exceptional charges for this year would be significantly higher than expected at £80m.

David Grigson, the finance director of Reuters, denied suggestions from some analysts that savings were proving harder to achieve than the company had thought. "It is not proving any more difficult. We have taken the deliberate decision not to short-term our savings," he said.

Cost-cutting was being implemented in a way that was in the long-term interests of the group, Mr Grigson said, adding that there was "high confidence" in meeting the cost target - set in 2003 - despite the fact that the weakening of the dollar had made it, in effect, £30m more. Some 40 per cent of Reuters' costs are in dollars.

"The one target that matters, which is the £440m over the Fast Forward programme, will be delivered, in 2006 ... it's just a question of timing," he said.

The exceptional charge to be taken this year is related to cost-cutting initiatives. For instance, Reuters has extended the scale of its new facility in India and the sale of its networking business, Radianz, to BT was taken longer than expected. Reuters is moving its London offices from various central London sites to Canary Wharf. This alone would result in a £40m charge.

Reuters reported that 2004 operating profits jumped 52 per cent to £198m. Revenues, at £2.89bn, were 11 per cent lower than in 2003, though more than half this decline was a result of currency movements. The company confirmed guidance that the first quarter of 2005 would see that rate of decline slow to 1.5 per cent, fuelling expectations that Reuters would finally see growth again later this year, after more than three years of contraction.

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