The parent company of Moody’s Investor Services, the ratings agency, reported a fall of almost 13 per cent in third-quarter net income yesterday and cut its full-year forecast in the wake of turbulence in global markets.

Moody’s Corporation announced a cost-cutting programme that is expected to see the business hit with a restructuring charge in the last quarter.

Raymond McDaniel, chief executive of Moody’s Corporation, blamed “continued weakness in the debt markets” for the downbeat full-year forecast.

Moody’s results were hit as investors bought fewer risky securities in the wake of the credit crisis, which reduced the demand for ratings.

Ratings is the area in which Moody’s generates most of its earnings, but agencies have come under fire for being too slow to downgrade assets affected by the problems with American sub-prime mortgages.

The company reported $136.9 million (£66.8 million) in net income for the three months to September 30, down from $157 million in the same period last year. Operating income fell almost 7 per cent from $268.8 million to $250.5 million.

Revenue rose 6 per cent to $525 million from $495.5 million after an 18 per cent increase in international business, to $218.4 million, offset a flat result of $306.6 million in the United States. The international results were flattered by the weakness of the US dollar relative to the euro and the pound.

The company said that operating expenses were $274.5 million, 21 per cent higher than the same time a year earlier. About half the increase was due to the cost of moving the company’s headquarters, as well as international expansion, new technology and higher personnel costs.

“Based on expectations of continued weakness in the debt markets, we are revising our 2007 earnings guidance downward,” he said.

Moody’s forecast full-year revenue percentage growth in the high single-digits to double-digits, down from its August expectations of a mid-teens rise. Full-year reported earnings per share are expected to be flat.

The results were in sharp contrast to that of McGraw-Hill, which owns Moody’s main rival, Standard & Poor’s (S&P). On October 18, it reported an 18 per cent rise in net income for the third quarter to $452 million. Revenue rose almost 10 per cent to $2.2 billion.

The company’s financial services operation, which includes S&P, saw revenue increase 12.5 per cent to $759.6 million and operating profit rose 17 per cent to $346.7 million.

Moody’s shares were down 2.5 per cent at $46.19 yesterday afternoon.

1900 and all that

— John Moody & Company published Moody’s Manual of Industrial and Miscellaneous Securities in 1900, the company’s founding year

— It provided information and statistics on stocks, bonds, government agencies, utilities and mining, manufacturing and food companies

— Moody’s ratings and analysis track debt covering more than 100 sovereign nations, 12,000 corporate issuers, and 29,000 public finance issuers

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