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3,000 jobs go as TR's financial business turns corner

Thomson Reuters said on Tuesday that net sales in its financial business turned positive for the first time since 2011 and announced 3,000 job cuts aimed at streamlining the business.

Logging positive net sales is an important milestone for Thomson Reuters because it shows new sales outpaced cancellations in the Financial & Risk division, which serves banks and financial institutions, Reuters reported. Since subscriptions are signed on an annual basis, net sales are a key indicator for future revenue.

“The era of portfolio churning has come to an end,” said chief executive James Smith, pictured.

The company announced a $350 million charge to accelerate a cost-saving plan and eliminate about 3,000 positions, mainly in Financial & Risk. That is in addition to the $100 million charge it took earlier this year to cover 1,000 job cuts. Including both rounds of cuts as well as jobs eliminated from divestitures and attrition, the Thomson Reuters workforce of about 60,000 will be reduced by about nine per cent.

“I think everybody in the world is trying to do more with less,” Smith said. “I don’t think the pressure on costs and keeping them under control is going to lessen. That said, what I hope is this strategy gives us a more predictable path in the future.”

The company announced a plan to repurchase up to $1 billion of its shares by the end of 2014. During the third quarter, it bought back about 2.9 million shares for about $100 million. Shares of Thomson Reuters have risen more than 25 per cent over the past 12 months. “We are going to be focusing on organic growth and less reliant on acquisitions,” Smith said about the timing of the new buyback.

Smith said he continued to expect challenging conditions in the coming quarters – particularly with the largest global banks. He added: “Our improving track record on execution gives me the confidence to now move even faster in our transformation work. We will pick up the pace of efforts to simplify and streamline our organisation, to shift resources behind the most promising growth opportunities and to use every tool at our disposal to drive value creation for all our stakeholders.”

Thomson Reuters said that to date, it had sold more than 100,000 Eikon desktops, its flagship product for banking clients.

Third-quarter ongoing revenue rose two per cent before currency changes to $3.07 billion on strength in its Tax & Accounting and Legal businesses, Thomson Reuters said. Excluding special items, the company reported a profit of 48 cents per share, flat with a year earlier and beating Wall Street expectations by four cents. Net income, which includes results from businesses in the year-earlier quarter that have since been divested, fell 37 per cent to $283 million. Tax & Accounting revenue jumped 10 per cent, benefiting from a rise in subscriptions and strong performance across all of the business segments except Government.

The company also announced plans to make contributions of about $500 million to its US and UK defined benefit pension plans this quarter. ■