Reuters Predicts Record Profits; New Satellite Service Announced, Branch System Sketched

Business is just fine, thank you, at Reuters Holdings PLC. The company is forecasting record revenues and profits in 1987, and says first quarter numbers came in ahead of target. Meanwhile, Reuters has announced plans to deliver its SDS2 quote service via satellite to Latin America, and has begun to speak publicly about its plans for serving the retail securities brokerage business in the U.S.

At its annual general meeting, Reuters chairman Sir Christopher Hogg told shareholders the firm expects "to meet our profit target for the year without any slackening of our heavy investment program for the future." New orders, he said, "remain buoyant in all major markets" and "figures for the first three months have come in ahead of target."

An analysis of Reuters's 1986 20-F SEC filing, meanwhile, shows that its Asian operations by far boast the highest margins in the firm. Reuters AANZ (Asia, Australia, New Zealand) has an operating profit of 62.8 million pounds on revenue of 146.2 million -- a 43 percent margin. Only profits at Reuters Europe are larger -- 73.6 million pounds -- but on revenue of 334.1 million.

Despite the profitability of Rich, Inc., the filing hints that Reuters is losing money in North America. Reuters North America reports revenue of 130 million pounds and a profit of 16.6 million, but the company's gross revenue includes 20.7 million in "intra group" sales, "principally from Reuters North America" to other units. If "principally" means more than 80 percent, RNA is posting a loss.

Nevertheless, Reuters North America hopes to contribute half of its parent's revenues in three years, says Aron Karp, marketing manager, branch office systems. In a presentation to a recent meeting of Empire Women in Telecommunications, Karp predicted, for one thing, that Rich's 1987 revenues will grow to $200 million, a 107 percent increase over 1986.

Karp also says Reuters's "baseline product for the retail branch brokerage market" is in beta test at seven "strategic brokerage firms," one being Pru-Bache. He won't name the others. The branch system, which incorporates some of Reveal's broker book software (MTR, September 1986), isn't designed to compete directly with Quotron, he says, although that clearly is the long-term goal.

Separately, Reuters says it will begin delivering market data from its Hauppauge, NY, tech center via satellite to Latin America and the Caribbean. The service will begin June 1st with a feed of commodity and money market reports, along with news and pictures. An expanded version of its SDS2 service -- with extra 300 pages of regional news and prices -- will be added in September.

The new service marks the first use of Intelsat's Intelnet I system, which uses satellite broadcast technology developed by Equatorial Communications Co. It is similar in principle to the small-dish technology offered by Equatorial in the U.S., but with 1.4-meter antennas and more expensive satellite channels.

Argentina, Brazil, Mexico, and Venezuela accounted for 8.5 million pounds in revenue in 1986, according to the Reuters 20-F. Other geographic highlights are shown below: