Reuters to axe 650 in fresh cull of managers

Reuters is to shed a further 650 jobs as it struggles to cope with a continued slump in its markets. The announcement sent the shares crashing to a nine-year low yesterday.

The supplier of financial news and information will take a further charge of £100m to cover the new redundancies, on top of the £235m of cost reduction charges already announced. The company also indicated that a tentative recovery expected next year was unlikely. The City took the need for more job losses – the company had previously announced it was axing 1,800 workers as a clear sign that its restructuring medicine was still not delivering a turnaround.

Michael Picken, an analyst at CSFB, said: "This [statement] indicates that they're running just to stand still. Now it looks like 2003 will be another negative year for revenues."

Reuters said this year's 12 per cent operating margin might not see much improvement in 2003. The company had been expected to demonstrate progress towards its goal of margins of 17 to 20 per cent. Analysts yesterday cut 2003 earnings forecasts by some 10 per cent, treating yesterday's statement as a profits warning. Now 2004 is seen as the earliest year for a recovery.

The sharp drop in Reuters shares yesterday, which closed down 14 per cent to 347.5p, reflected the loss of the premium the stock had previous enjoyed over other business information providers, such as Pearson and Reed Elsevier.

The new redundancies will fall primarily in senior and middle management ranks. The cuts aim to save £20m a year.