Reuters surges as 'worst put behind it'

The financial news and information group Reuters said yesterday it was past the worst of the downturn, with revenues showing an improving trend for the first time in two years.

Sales will still decline in the first quarter of this year, the company said, but at a lower rate than seen towards the end of last year.

Revenues entered negative territory two years ago, though core revenue growth had really stalled at the end of 2000.

Tom Glocer, the chief executive, said: "I am confident that we have now passed the inflection point in our recurring revenue decline. While we still expect the recovery in recurring revenue to be gradual, we are looking forward to working with our customers to build on this improving trend."

Reuters shares reacted with a 14 per cent jump to 318.5p, even though the stock has been rallying in anticipation that the company would deliver good news in yesterday's first-quarter trading update.

Mr Glocer has cut thousands of jobs and launched a series of new products to try to meet the challenge of a contracting top line.

The company reported that cancellations in the fourth quarter of last year showed an improvement over the previous quarter, extending the trend seen in the first three quarters of last year.

As a result, Reuters said it expected the decline in recurring revenue in the first quarter of this year will be "9 per cent or slightly better". That 9 per cent drop in sales is an improvement on the 10.9 per cent fall seen in the third quarter of 2003.

Figures for fourth quarter sales for last year have not been released yet but are forecast to have been down some 11.5 per cent.

Simon Baker, an analyst at SG Securities, said that the improving trend shown yesterday helped the market believe in the "cyclical recovery story". However, the broker is not forecasting revenue growth until the back end of 2005.

"Glocer's medicine is working, though there are still big hurdles. Cyclical risk is still weighing and we will need to assess the impact of the new products," Mr Baker said.