Thomson Reuters Q3 earnings beat estimates

The company, in Q3 results announced on Tuesday, reaffirmed its outlook for 2011 as its margins improved.

In September the company said it would merge the professional division, which serves mainly lawyers and accountants, with the struggling markets division, which targets banks and other financial institutions.

“We expect the benefit of these changes will improve sales performance in 2012 and benefit 2013 revenue growth,” chief executive Tom Glocer said in a statement.

Markets accounts for about 58 per cent of overall group revenue. The division posted revenue growth of just one per cent as banks continued to slash jobs and costs.

The company has also been hurt by the slow uptake of its new Eikon desktop product for traders and analysts, Reuters reported. It sold or migrated 32,000 Eikons by the end of September, up from 28,000 three months earlier.

“Conditions were challenging in some of our markets, but that’s not a good enough excuse as various competitors were still able to grow their businesses,” Glocer said in a memo to staff. The company would grow by driving sales in fast-growing markets and taking share in slower ones, he said.

In July Reuters reported sources familiar with board thinking saying Glocer was under pressure from directors and the company’s controlling shareholder, Canada’s Thomson family, to improve performance. At that time, sources said he had about a year to make that happen.

James Smith, former head of the professional division, was elevated to the new role of chief operating officer in September, putting him in a strong position to succeed Glocer.

Thomson Reuters reported third-quarter revenue of $3.26 billion, up five per cent before currency changes. Analysts had expected $3.23 billion.

Revenue in the professional division, which accounts for 42 per cent of overall revenue, increased 10 per cent after growing eight per cent in the second quarter. The one per cent revenue growth in markets was unchanged from the second quarter.

Adjusted earnings per share rose to 56 cents from 45 cents in the same quarter last year. Analysts had expected 53 cents.

Thomson Reuters said it still expects revenue to grow by a mid-single-digit percentage rate in 2011.

The company’s underlying operating margin improved to 22 per cent, from 21.2 per cent a year earlier.

Thomson Reuters shares have fallen 20 per cent this year, worse than the market at large. ■