Reuters offers glimmer of hope on sales as prospects improve

Shares in Reuters, the financial news and information provider, shot up 8.5 per cent after the company revealed that sales outpaced cancellations for the first time in more than three years. The group also provided hope that it would see revenue growth in 2005.

Shares in Reuters, the financial news and information provider, shot up 8.5 per cent after the company revealed that sales outpaced cancellations for the first time in more than three years. The group also provided hope that it would see revenue growth in 2005.

Reuters beat City expectations with its third-quarter trading update. Recurring revenues were down 4.4 per cent on an underlying basis for the quarter, ahead of Reuters' previously forecast decline of 5 per cent.

The company said the last quarter should see revenues fall 3 per cent, giving a full-year figure of sales down 5.5 per cent. Reuters has endured four years of shrinking sales after capital markets turned down and its clients in the financial services sector made large-scale job cuts, thereby reducing the number of workers needing access to a Reuters terminal.

David Grigson, the finance director, said the third quarter had seen "a breakthrough moment" because Reuters sold more subscriptions than it cancelled. He said: "That is a necessary prerequisite for revenues to go into positive territory."

The last time Reuters saw sales exceed cancellations for an entire three-month period was for the first quarter of 2001. The company said the "recent trend of gradual improvement is expected to continue into 2005".

It was careful not to predict that 2005 would see top-line growth. Mr Grigson said that while the company had told employees to "budget" for growth next year, it was not the same as forecasting it would see growth. He said: "I am reasonably cautious ... however, if we don't push for it [growth], we may never get there."

Mr Grigson added that it was possible to "paint a picture where we don't quite make it" to seeing growth.

The City decided, however, that Reuters had provided the clearest evidence yet that revenue expansion would soon return. Tom Glocer, the chief executive of Reuters, said that while the company "continues to make good progress", there were hurdles still to overcome.