Thomson Reuters predicts 6 pct to 8 pct revenue growth
NEW YORK—Thomson Reuters Corp., a newly combined provider of business and legal information, forecast revenue growth between 6 percent and 8 percent for the year Thursday, despite turmoil in the U.S. financial sector.
Thomson Reuters also said it expected to see annual cost savings of up to $1 billion by the end of 2010, earlier than had been previously expected, with that figure rising to $1.2 billion by the end of 2011.
The company was formed April 17 through the combination of Thomson Corp., a Canadian legal and professional information provider, and the British financial news and data company Reuters Group PLC. Thomson paid about $15.8 billion to acquire Reuters.
Thomson Reuters reported its first quarterly results Thursday, but since the deal was completed after the close of the quarter on March 31, the combined figures were presented on a pro forma basis, as if the two companies were already operating as one during the quarter.
On that basis, operating profits rose 37 percent to $579 million, compared with $424 million in the same period a year ago. The company didn't provide a net earnings number on a pro forma basis.
Pro forma revenues rose 12 percent to $3.25 billion, from $2.92 billion.
Analyst Gareth Thomas of Collins Stewart in London told investors in a note that while the first quarter results were "solid," he noted that the $1.2 billion in savings included $300 million from previous plans. He said the costs to achieve those savings would be "substantial" -- about $900 million.
Goldman Sachs analyst Peter Appert called the results "healthy" in a note and said he was "impressed" with the growth across the company's broad portfolio.
"The company's ability to navigate the current challenging macro environment while sustaining high single digit organic revenue growth is testimony to the underlying appeal of the company's franchise information offerings," Appert said.
The company's shares started off trading higher but fell 60 cents to close at $37.
CEO Tom Glocer told analysts on a conference call that the company still expects to see growth this year despite the disruptions in the U.S. financial services sector. Thomson Reuters provides a variety of financial information services to investors.
Glocer noted the company had strong operations in Asia and the Persian Gulf, as well as other revenue streams besides financial data, such as legal, tax and accounting and scientific information that were likely to hold up better in an economic downturn.
"We are not immune to the cycle," Glocer acknowledged, adding that the company "may very well see a softening later in the year .... But our net sales have remained strong, and that's the best forward indicator other than market chatter that I have."
Thomson Reuters also reported separate quarterly results for Thomson Corp., which was still a stand-alone entity at of the end of the quarter before it absorbed Reuters.
Thomson's own earnings attributable to common shares fell 14 percent to $192 million, or 30 cents a share, from $223 million, or 35 cents per share in the same period a year ago. Revenues rose 10 percent to $1.83 billion.
Thomson Reuters competes with Bloomberg LP in financial news and information, with each commanding about a third of the market. Thomson Reuters operates in 93 countries and has more than 50,000 employees.
Reuters was founded when Paul Julius Reuter began transmitting stock market quotations between London and Paris via the Calais-Dover cable in 1851.
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