Reuters raises sales forecasts after US revival boosts sales

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The Independent Online

Reuters pointed to improved trading yesterday as the provider of news and financial information predicted core revenues would fall less this year than previously forecast.

Recurring revenues - income from its subscribers - are now expected to fall by between 10.5 per cent and 11 per cent this year, compared with previous guidance of 11 to 12 per cent. Third-quarter recurring revenues fell 10.9 per cent to £609m.

Shares in Reuters rose 6.2 per cent, or 14.5p, to 249p - making it the biggest riser in the FTSE 100.

Tom Glocer, the chief executive, said: "Trading performance this quarter was a little better than expected, driven by a reduction in the overall rate of net cancellations for the third consecutive quarter."

Net cancellations - sales minus cancellations - fell to their lowest since the first quarter of 2002. The improvement - the third quarterly uptick in a row - was driven mainly by the US "with no evidence yet of any improvement in Europe," Reuters said.

Omar Sheikh, an analyst at Charles Stanley, said the company had "technically beaten forecasts and raised guidance". But it was "a little bit more cautious than you might expect ... given what's going on among their customers. Profitability among the investment banking segment of their customers, which is about 30 per cent of core revenues, is clearly better."

"You get the sense that they feel that things have turned but they don't want to raise expectations too early just in case it's a false dawn or they have another blip."

Reuters said group revenue for the three months to 30 September was £789m, down 8 per cent from last year.

Revenue from investment banking was hard hit, falling 17 per cent to £174m, and revenue from asset management fell 13 per cent to £157m.

Reuters plans to issue another statement in January, once it has analysed December sales figures, to give guidance for the first quarter of next year. December is a key month since many of its customers fix their budgets then.

The company said it remained on track to deliver £55m of cost savings this year. More than 1,000 staff had left this year as it cut costs.