Tom Glocer: "Challenging" trading conditions

Group revenue for the January to March period of this year declined 6% to £912m ($1.3bn) from £970m for the comparable period in 2001, Reuters said.

Electronic brokerage Instinet suffered a 39% drop in revenues compared with a year ago, when share trading hit record volumes, Reuters said.

Excluding Instinet, group revenues rose by 5% to £762m.

Instinet revamp

Instinet, which is 83% owned by Reuters, faces tough competition from the increasing number of online share trading platforms amid jittery stock markets.

Instinet replaced its chief executive in April, a fortnight before posting its first-ever quarterly loss, of $35m for the January to March period.

The business is the midst of a restructuring plan to save $120m a year and will shut its fixed income business.

"We are actively supporting Instinet's plan to address its market position and profitability through new product roll-out, technology upgrades and substantial cost reductions," said Tom Glocer, Reuters Group chief executive.

'Challenging' market

Reuters' underlying revenue, excluding the impact of acquisitions, disposals and currency movements, declined 13% for the group as a whole.

Underlying revenue from Instinet was down 42%, and for the Reuters news and information business declined by 2%.

Mr Glocer said market conditions remained "challenging" and that the firm saw "no near-term turnaround in the depressed conditions affecting its financial services customers".

Nonetheless, the group said it expected to improve operating margins to 12% during this year.

Mr Glocer forecast subscription revenue would grow this year, aided by the acquisition of ex-rival Bridge, a financial information firm.

However, underlying subscription revenue was expected to decline by 2-3% in the first half of 2002, and by 5-6% in the second half.

Fingers crossed

Orders for solutions sales remain healthy and Reuters continues to anticipate good growth in these revenues, Mr Glocer said.

On a more cautionary note, he added that most forthcoming deals are pencilled in for the second half of the year and the precise timing of the conversion of these sales to revenue remained "difficult to predict".

In the City, where analysts had expected Reuters to report revenues of £920-30m, shares in the firm slid to 478.5p in early trade.

The stock recovered to close down 5p at 506p.