Last updated: August 6, 2009 4:45 pm

Thomson Reuters beats expectations

Thomson Reuters on Thursday held to its forecast of full-year revenue growth and stable profit margins, as cost savings from the 2007 merger that created the markets data and professional information group continued to offset challenges in its makets.

Thomson Reuters' figures

Thomson Reuters' figures

Like-for-like revenue growth of 2 per cent and an 11 per cent underlying operating profit improvement indicated the group was succeeding in its aim of taking market share from rivals, said Tom Glocer, chief executive.

Reported second-quarter revenues were up 5 per cent to $3.29bn and net earnings more than doubled from $154m to $325m, but these were affected by the fact that Thomson Corporation’s acquisition of Reuters completed on April 17 last year, in the middle of the comparable period.

Adjusted earnings per share were 58 cents, up from 39 cents a year ago, as free cash flow rose 16 per cent to $738m.

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“Everyone can easily see the difficult bits,” Mr Glocer told the Financial Times, highlighting well-publicised weakness in businesses such as investment banking and mergers and acquisitions. This was offset, however, by strength elsewhere.

“Our revenues are holding up better than out competitors,” he said.

The group’s smaller healthcare and science division, and its tax and accounting business, both saw accelerating revenue growth thanks to new products.

Most of the profit growth came, however, from the larger markets division, where integration plans hit an annualised run rate of $925m in the quarter, prompting Thomson Reuters to raise its forecast of run-rate savings for 2009 by $25m to $1bn.

The announcement came on the eve of shareholder votes to approve the group’s plan to delist from the London Stock Exchange, ending a dual-listed company structure that was meant to benefit shareholders of both the UK and Canadian companies after the deal, but which ended up perpetuating large valuation gaps on different exchanges.

Mr Glocer could not predict the outcome of the votes but said the company had been “gratified” by the support it had received from shareholders for the plan.

Organic revenue growth was 2 per cent in the professional division, driven by healthcare and tax, with the large legal division up just 1 per cent.

The markets division recorded organic revenue growth of 0.2 per cent as demand for low-margin exchange data feeds declined, investment managers cut staff and foreign exchange volumes fell, while the group struck more enterprise-wide deals for reference data and pricing services.

Revenues in the media business fell 6 per cent, reflecting newspaper consolidation. Mr Glocer said he agreed with Rupert Murdoch of News Corp, who said on Wednesday that he would charge on all his news websites, that professionals would pay for content.

Mr Glocer declined to comment on reports that Thomson Reuters has held talks with Breakingviews, an online financial commentary service. Bob Daleo, chief financial officer, said it had capacity for $300m-$400m of bolt-on acquisitions of business each worth up to about $50m.

Shares in Thomson Reuters closed 6.3 per cent or 119p higher in London at £19.98.

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