Severance costs weigh on Thomson Reuters Q1 earnings

The decline did not change the company’s outlook for the remainder of the year: it reaffirmed its forecast for 2013 revenue growth in the low single digits.

The company spent $78 million on severance costs from January to March and also booked a tax charge of $235 million. In February it said severance costs related to about 2,500 job cuts would be $100 million.

"We are executing more effectively, launching better products, simplifying our systems and processes and managing with more rigor and discipline, which is why our confidence continues to build," chief executive James Smith, pictured, said in a statement.

Smith said the group was “through the bump” of the majority of the severance charges and expected improving performance in the second half of 2013.

Reuters reported that the company is the midst of a turnaround after Thomson Corp’s $17 billion acquisition of Reuters in 2008. It coincided with a financial crisis that prompted banks – core customers of the financial & risk division, to slash costs and cut staff.

Adding to the challenge was the premature roll out to its financial clients of its flagship desktop product, Eikon.

By the end of the first quarter, the company said that Eikon desktops totalled nearly 47,000, up 38 per cent from the end of last year. That was a slightly larger increase than the 33 per cent rise seen between the third and fourth quarters of 2012.

Smith told the Financial Times that the higher trajectory of Eikon sales looked sustainable for the rest of the year. He was “very encouraged” by sales trends in a challenging market but noted the lag effect, which means that the impact of new sales is not felt for several quarters.

“This is a multi-quarter turnaround and we’re still in the middle of it,” he said. “The challenge is, it takes a while to turn the ship, but we feel very good about the things under our control.”

The company reported that revenue from ongoing businesses rose two per cent to $3.1 billion before currency changes on the strength of its legal and tax & accounting divisions.

Revenue at financial & risk, after subtracting acquisitions, divestitures, and currency changes fell three per cent. This is because the division had negative net sales from the cancellation of subscriptions in 2012, the company said. ■