Reuters leaves markets cold

The market shrugged off strong improvements in sales and profits at Reuters, the news and information group, focusing on a warning from the chief executive, Peter Job, that 1995's growth would not match last year's. The shares closed 812p lower at 43812p.

The company's decision to make acquisitions in expanding but immature markets hit the pre-tax margin, which fell for the second year running despite strong cash flow from core operations.

As a result pre-tax profits grew by 16 per cent to £510m in the 12 months to December, which compared with a 23 per cent increase in revenues to £2.31bn.

Mr Job tempered his caution, however, saying: "Sales of our dealing systems are good, as is the order book. There has been a bit of a panic in some emerging markets but we don't see this as cataclysmic."

Sales improved despite flat prices, benefiting from a 31 per cent rise in turnover from emerging markets. Earnings per share were 20 per cent higher at 21.7p and the final dividend was 6.1p, making a full year total of 8p, a 23 per cent increase.

Mr Job said: "Our key activity indicators were especially pleasing. Total screens accessing products have hit the 300,000 mark against around 200,000 two years ago. Dealing 2000-2, our automated dealing product, comfortably exceeded its target of 10,000 matches a day."

He added that 1994 had benefited from strong growth in transaction products, from record sales of information services and from acquisitions, including Teknekron, an American software supplier, and Quotron, the US provider of real-time equity quotes.

Despite worries about the consolidation of the financial industry, which accounts for the bulk of Reuters sales, the company has performed strongly since flotation 10 years ago.

Over that period, earnings per share have risen sevenfold from the equivalent of 3.3p, while the dividend has grown by a similar amount from 0.81p.

Mr Job said Reuters' cash pile, which grew during the year from £450m to £534m, would be invested in existing businesses; no acquisitions are planned. In 1993 the company spent £350m buying back its own shares.

The European operation benefited from a strong UK performance, which contributed to a 17 per cent increase in profits.