Write-downs force Reuters into £493m loss

The carnage at Reuters is to continue for the foreseeable future, the media group warned yesterday, as it unveiled another massive restructuring programme.

The company announced a further 3,000 job losses and new charges of £340m to cover the latest plans to reshape the business. The financial information giant added that the outlook for 2003 was even worse that expected, sending the shares down 12 per cent to a new low of 135.5p.

Analysts said current dividend levels were under threat as such payouts are not now covered by predicted earnings for 2003 and 2004.

The "Fast Forward" plan laid out yesterday is an acceleration of the rate of change and cost-cutting at the company, as it tries to keep pace with retrenchment among its clients. It succeeds the "Business Transformation Programme" announced by Tom Glocer in 2000, shortly after he was made chief executive, and which has already seen 3,000 jobs go.

Reuters announced a £493m loss for 2002, although the dividend was held at 10p a share. The loss – the first since Reuters was floated in 1984 – came after £462m of charges and writedowns, although analysts said the underlying results were slightly better than expected. "Normalised" profit before tax was £89m.

The company announced that it is to withdraw from IT consulting, except where such work mostly involves Reuters products. It is to slim down its range of products and put everything on a single technology platform, rather than the dozens that currently exist.

Mr Glocer said: "Our business is too damn complicated and spread over too many technical architectures."

Reuters had previously indicated that 2003 revenues would be down 7 to 9 per cent. It said yesterday the first quarter of the year would see sales 9 per cent lower but that will fall further in the second quarter. No guidance was given beyond the first half of the year.

Tobias Reeks, an analyst at Dresdner Kleinwort Wasserstein, said: "There is no comfort offered about earnings going forward ... It is anyone's guess when revenues will stabilise."

The new restructuring plan aims to save £440m by the end of 2005, when the headcount should stand at 13,000. The £340m charges to get there include a cost of £160m for 2003. The separate savings from the Business Transformation Programme are expected to fully come through this year at £445m. Analysts cut profit forecasts for this year by some 10 per cent before accounting for the new charges. Mr Glocer said: "I think we've delivered on phase one of the business transformation. However, our markets have got worse and we have to accelerate our transformation if we are to get to the kind of company we want."

Reuters claimed to have gained one percentage point of market share versus its rivals but industry sources said it continued to lose ground to its rival Bloomberg at the premium end of the market and its share gains were down to its acquisition of Bridge.

The company indicated the latest redundancies would not hit its 2,400 editorial staff to any great extent. The cuts will come from sales support staff, product developers and those that used to do its consulting work.