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Thomson Reuters Q1 net profit falls 31% to $555 million

Tuesday 4 May 2010

Thomson Reuters reported lower quarterly profit on Tuesday, reflecting lingering effects of the financial crisis on sales to business and legal clients. The company reiterated that net sales would strengthen this year and that revenue would grow again in the second half.

"The tentative recovery in our net sales that we began to see in the second half of 2009 has firmed and accelerated in the first quarter of 2010," chief executive Tom Glocer said in a statement.

First-quarter underlying profit was $555 million, down six per cent from $590 million last year. Adjusted earnings per share fell to 36 cents from 40 cents in the same quarter last year, but beat the average analyst forecast of 31 cents. Revenue from ongoing businesses was $3.14 billion. Analysts expected $3.11 billion. Foreign exchange rate movements excluded, revenue fell two per cent.

The company stuck to its February forecast, saying net sales would strengthen throughout 2010. It also repeated that this year's revenue would be flat to slightly down and that underlying free cash flow would be down slightly from 2009 as it invests in new products and platforms.

Thomson Reuters said it would spend more than $1 billion on new technology and products. Among them is Eikon, a new desktop for financial and trading clients.

MARKETS DIVISION

  • Revenue was flat in the markets division, which includes the news service and data products for financial industry customers. Excluding the impact of foreign exchange rates, revenue fell four per cent. Markets  revenue depends heavily on long-term subscriptions. The financial crisis, which crested in early 2009, triggered massive layoffs and cancellations of trading terminals. While the economy has improved, many of these cancellations have shown up in recent quarterly results.

PROFESSIONAL DIVISION

  • Revenue rose two per cent in the professional division, which sells databases and other information reservoirs to lawyers, accountants, scientists and healthcare workers. Excluding the impact of foreign exchange rates, this revenue rose one per cent. Many law firms cut staff as they struggled in the recession, and cash-strapped clients sought lower legal bills. Legal revenue slipped three per cent before currency adjustments.

 

Earnings call transcript ■

SOURCE
Reuters