Thomson Reuters Results Don’t Reflect Downturn

Last week Reed announced figures that surprised the market. This week it’s Thomson Reuters turn..

You can read a full report from the Times (UK) below.

The basic precis is as follows

  • Fears that revenues would drop as banks cut subscriptions fails to materialize
  • Operating profits in Q4 2008 were $US656million
  • Revenue for the markets divsion only fell by 2% for the year
  • Revenue  for the  professional division, which includes Westlaw rose by 3 per cent in the fourth quarter to $1.5billion.


Thomson Reuters’ news beats City expectations

The publisher bucks the downturn as – despite fears banks would cut subscriptions to its data services – earnings rise
Alexi Mostrous

Thomson Reuters reported 51per cent growth in fourth-quarter earnings yesterday as the financial publisher flourished in the face of the economic downturn.

The group beat City analysts’ expectations by recording operating profits of $656million (£456million) in the final three months of 2008. It expected revenue to grow this year.

Many analysts had expected Thomson Reuters to be battered by the global recession, as banks cut their subscriptions to its real-time data services.

Yet the revenue of the group’s markets division, which deals with the financial industry, fell by only 2 per cent year on year to $1.9billion.

Tom Glocer, the group chief executive, said: “I am very pleased with the operating performance of Thomson Reuters in 2008, as well as the significant progress we achieved in integrating the acquired Reuters business. As major economies slid into recession in 2008, we continued to perform well. Based on the current environment in the markets we serve, we expect our revenues to grow in 2009.”

Revenue for the publisher’s professional division, which sells databases such as Westlaw to lawyers and accountants, rose by 3 per cent in the fourth quarter to $1.5billion.

Mr Glocer said: “The business model of supplying professionals with all-electronic content is something that is not a luxury good.”

Thomson Reuters is reaping benefits of the merger last April of Thomson Corp and Reuters Group. Yesterday it raised its forecast of annualised cost savings from the merger to $1billion by the end of 2011, from $750million projected in May 2008.

The group reported profits from ongoing businesses, excluding special items, at 57 cents per share (40p), beating the average analyst forecast of 39 cents. Full-year pro rata revenues were up by 8 per cent at $13.4billion.

Alex DeGroote, a Panmure Gordon analyst, said: “They’re seeing sales growth; that’s probably a positive in this environment. The expectation of flat free cashflow in a tough market for the world appears very laudable.”

Thomson Reuters’ London shares have fallen by about 25 per cent in the past year and its Canadian shares have fallen by about 20 per cent amid worries about sales to financial clients. The shares in London yesterday closed up 6.5 per cent at £14.09.


So the big question for both publishers (professional divisions) is will they be able to maintain this good run of results into the first quarter of 09. In terms of savings they are making all the right noises for shareholders. Pay freezes, laying off US & UK staff, employing LPO / BPO’s in Asia. But will this be enough to stave off the rout in the UK & US legal industry as the big firms cut staff and cut budgets.

We can only wait and see.