Thomson Reuters posts sharper-than-expected fall in profit

NEW YORK Wed Feb 12, 2014 9:33pm IST

The Thomson Reuters logo is seen inside the lobby of the company building in Times Square, New York October 29, 2013. REUTERS/Carlo Allegri/Files

The Thomson Reuters logo is seen inside the lobby of the company building in Times Square, New York October 29, 2013.

Credit: Reuters/Carlo Allegri/Files

Related Topics

Stocks

   

NEW YORK (Reuters) - Thomson Reuters Corp (TRI.N)(TRI.TO) on Wednesday reported a steeper-than-expected drop in fourth-quarter earnings, hurt by cutbacks at financial institutions in Europe and in emerging markets, sending its shares down more than 5 percent.

Chief Executive Officer Jim Smith said headwinds at the end of last year were stronger than anticipated, and he saw financial markets remaining "challenged" for some time to come as the global banking system restructures.

The global news and information company forecast that 2014 revenue would be flat, compared with a 2 percent increase to $12.5 billion in 2013, excluding divestitures and currency changes.

"It's still a volatile time everywhere," Smith said in an interview. "We did see more weakness in Europe and in Asia than we expected in the fourth quarter."

Thomson Reuters said fourth-quarter underlying operating profit dropped 50 percent from a year ago, partly due to previously announced charges related to job cuts and other restructuring expenses. Excluding the charges, operating profit fell 5 percent to $577 million in the fourth quarter.

It reported adjusted fourth-quarter earnings of 49 cents per share, below the average analyst estimate of 52 cents, according to Thomson Reuters I/B/E/S. Revenue rose 1 percent to $3.265 billion, roughly in line with expectations.

About one-half of revenues come from banks and other financial institutions, and about one-quarter from the legal profession. Both sectors have lowered spending, trimmed costs and consolidated. For instance, Britain's third-biggest bank, Barclays Plc (BARC.L), said on Tuesday it would slash 12,000 jobs this year.

"Ultimately it's still a tough environment," said Claudio Aspesi, an analyst with Bernstein & Co. "The scrutiny of costs is high and spending levels are subdued," he said about Thomson Reuters' customer base.

Revenue in the Financial & Risk division, which caters to banks, retail brokers and other types of firms, fell 2 percent to $1.6 billion as product cancellations outpaced new sales.

Smith declined to comment on new sales in the current quarter, but said he was pleased with the way the year had begun and expected "gradually improving net sales to continue."

Thomson Reuters said its flagship product for financial institutions, Eikon, was installed on 123,000 desktops as of January 31, 2014, compared with 96,000 at September 30, 2013.

By region, Financial & Risk revenue fell 3 percent in Europe, Middle East and Africa, was off 3 percent in the Americas, and rose 2 percent in Asia.

Revenue at the legal division, known for its Westlaw legal database, was up 2 percent to $868 million, mainly due to acquisitions. Organic revenue, excluding acquisitions, fell 2 percent, largely due to weakness in Latin America and a drop in U.S. print revenue as law firms spent less on print case law books.

Smith said Thomson Reuters, which employs about 60,000 people globally, is cutting costs and pushing for innovation in an effort to transform its business. During the fourth quarter, it cut 3,000 positions.

The company reported a net loss of $343 million in the quarter, including a restructuring charge of $275 million. That compared with a net profit of $368 million a year earlier. It said it expects to take another $120 million in charges in 2014.

Thomson Reuters shares fell 5.2 percent to $34.71 in early trading in New York.

"While the external headwinds were stronger than anticipated at year-end, particularly in Europe and the emerging markets, I am pleased with the progress we continued to make inside the company and with our customers," Smith said.

(Editing by Tiffany Wu and Jeffrey Benkoe)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Global Growth

Global Growth

IMF cuts outlook, warns of stagnation risk in rich nations  Full Article 

Waning Enthusiasm

Waning Enthusiasm

Markets' post-election enthusiasm lost on consumers.  Full Article 

Monsoon Revives

Monsoon Revives

Monsoon revival keeps rain above average   Full Article 

Banking Sector

Banking Sector

Banks not allowed to trade in bonds for infra lending - RBI.  Full Article 

Just Not Enough

Just Not Enough

Amazon's smartphone fails to kindle a "Fire" among reviewers.  Full Article 

Rising Market Value

Rising Market Value

Facebook goes express to mega-cap status  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage