Cost cuts help Q2 results beat forecasts

Q2 underlying operating profit rose 11 per cent to $793 million, or 58 cents per share, from $713 million, or 39 cents per share, in the same quarter a year ago. Analysts had expected earnings of 43 cents per share on that basis, according to Reuters Estimates.

The company attributed the profit growth to cost controls, currency benefits and savings from Thomson's purchase of Reuters last year. It expects $1 billion of annual savings by the end of 2009. The target is $1.4 billion by 2011.

Revenue from ongoing businesses, excluding the impact of foreign exchange rates, rose two per cent to $3.28 billion.

The company stuck to its forecast that revenue would grow this year and that underlying operating margin and free cash flow would be comparable to 2008, even as customers cut staff and budgets in the wake of the financial crisis.

"Quite a few banks are saying, 'Oh, we cut too deeply and we're finding business is so good, we need to hire people to handle the volume,'" CEO Tom Glocer said in a Reuters interview. "I couldn't imagine six months ago that people would be talking about guaranteed bonuses over multiple years to hire people," he said.

Nevertheless, the fallout from the financial crisis will likely squeeze the Markets division, Glocer said. "It's only logical to assume that in the second half of the year, the (division's) reported revenue growth will go below the zero line rather than above it."

Thomson Reuters shares on the London Stock Exchange traded 6.44 per cent higher at 2000 pence after the release of the results, smashing through the previous 52-week high.

Shareholders will vote at extraordinary general meetings in London and Toronto on Friday on a proposal to delist the company's shares in London. They will continue to trade in New York and Toronto.

Analysts' earnings call ■