| Reuters focuses on 'radical restructuring' The unstable economic situation in the world can cause the ruin of not only corporations and banks. As a result of the latest stock market crashes, the Reuters Group news agency is experiencing hard times. On Tuesday, the world's largest financial information provider announced its first large-scale loss in its 150 years of existence. Over the past 12 months, the company's shares have fallen rapidly in price - in total, they have lost more than 70% of their value. Financial indicators were also disappointing. If in 2001 the Reuters agency received a net profit of 46 million pounds, then at the end of 2002 the total loss amounted to 394 million pounds. (Previously, six analysts surveyed by Bloomberg limited the company's losses for this period to 110 million pounds).
Experts attribute the situation in which one of the most famous news agencies in the world finds itself to a general decline in demand for information services. Recently, many large customers have significantly reduced the volume of their orders. In particular, the agency's subscription revenues decreased by 8% in 2002 (to £3.58 billion).
The only way to return to profit, according to management, is to continue radical restructuring, which includes cutting costs by cutting staff. It started two years ago. During this time, the agency cut more than 10% of its staff (about 2.5 thousand jobs). This time the management is ready to go even further. Reuters CEO Tom Glocer, who took office in July 2001, is confident that deep cuts to the company's workforce and services will lead to significant savings in the future. The main thing, in his opinion, is to “focus efforts on the strengths of Reuters.” The new restructuring plan, as announced on Tuesday at a press conference in London, involves the reduction of 3 thousand people from a total staff of 16 thousand by 2006. This, according to estimates by the agency's management, will help save about 440 million pounds.
It is too early to talk about the effectiveness of the announced measures. However, it is significant that despite the significant cost savings, the three-year wellness program itself will cost Reuters £340 million, the agency said in a statement. Denis UVAROV |
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