Thomson Reuters Q1 profit beats forecasts

CEO Tom Glocer said the climate in the market had improved but not enough to rule out further weakness.

"I can't really call exactly where the bottom is. There can be false dawns. Right now sentiment is quite good in the market. We see them opening up their purse strings just a little bit," he said.

The London-listed shares closed a tad under 44 pence lower at 1,812 pence, down 2.37 per cent, after hitting a record high of 1,939 before the results were released.

Greater losses were registered in New York and Toronto.

In New York, Thomson Reuters shares closed 5.73 per cent lower at $29.77, a loss of $1.81. 

On NASDAQ, the shares closed at $161.51, down $7.98 or 4.71 per cent.

In Toronto, the fall was 4.75 per cent or C$1.75 to a close of C$35.08.

Thomson Reuters’ Q1 net income was $228 million, or 27 cents a share, compared with $194 million, or 30 cents a share, a year ago.

Underlying operating profit, excluding amortisation, integration costs and other items, rose two per cent to $588 million, or 40 cents per share, beating the average analyst forecast of 34 cents per share.

Revenue from ongoing businesses was $3.12 billion, down three per cent from a year ago but up three per cent before currency effects. Analysts on average were expecting revenue of $3.17 billion.

The company reaffirmed its outlook for revenue to grow in 2009, and for underlying operating margin and free cash flow to be comparable to 2008, supported by revenue growth and the expected savings from integration programmes.

Thomson Reuters has said it expects annualised cost savings of $1 billion by the end of 2011, and Glocer said that while this was a good target, he did not rule out more.

Revenue in the Markets division, which supplies news and data to financial institutions, fell seven per cent to $1.85 billion, hurt by lower transaction volumes and job cuts. But the revenue would have risen 0.4 per cent before currency effects.

Though the outlook has brightened in recent weeks, financial institutions have been hit by closures, mergers and deep job cuts, and Reuters reported that the company is regarded by some analysts as the riskiest bet among professional information providers due to its exposure to the financial sector for about 60 per cent of group sales.

But strong execution, a high proportion of subscription and digital revenues, and the resilience of the Professional unit have helped to drive up Thomson Reuters London-listed shares by more than 20 per cent in the year to date.

Revenue at the Professional division, which supplies information to lawyers, scientists, accountants and the healthcare industry, rose two per cent to $1.27 billion, or five per cent excluding currency effects.

Glocer told the Financial Times that Thomson Reuters can take market share from rivals once turbulent financial and legal markets revive.

Bloomberg’s fall in terminal numbers by 2.5 per cent since November suggested “a much stronger descent than we’re seeing” in the markets business where they compete, Glocer said. “I certainly feel we’re at least holding our own.”

Much of the market share gains the group foresees would come from taking over the “do-it-yourself” data efforts of large banks and other customers, he said. Subscriptions had risen by two per cent in the markets business, while transaction revenues had fallen, but would rebound quickly in a recovery, he added.

“It feels like sentiment has changed in the last month,” Glocer told the FT, “but we don’t run our business on the basis that we need to clutch at green shoots.”

Robert Daleo, chief financial officer, said savings from integration were ahead of plan, adding that when combined with earlier initiatives these were on track to meet a $1.4 billion target by 2011.

Analysts’ earnings webcast ■