Thomson Reuters Profit Beats Analysts’ Estimates on Cuts

Thomson Reuters Corp. (TRI), the provider of financial data and news, reported second-quarter profit that beat analysts’ estimates as cost cuts buoyed results.

Earnings excluding items were 51 cents a share, exceeding the 46-cent average of predictions compiled by Bloomberg. The New York-based company said today in a statement that it plans to repurchase as much as $1 billion of its stock by the end of next year. The shares rose the most in three months.

A cost-reducing plan for the financial and risk business, announced in October, helped boost results, Reuters said. The news provider reaffirmed its 2014 outlook, including revenue comparable to last year and a margin for profit before interest, taxes, depreciation and amortization of 26 percent to 27 percent. That margin improved to 27.8 percent in the second quarter from 27.6 percent a year earlier.

“Jim Smith, the CEO, has put out some very aggressive cost-cutting rationalization and simplification goals,” Douglas Arthur, an analyst at Evercore Partners in New York, said in a telephone interview. He has the equivalent of a hold rating on the shares. “Margins are coming in higher than expected.”

Reuters rose 3 percent to $37.99 at the close in New York. The shares have increased less than 1 percent this year, while the Standard & Poor’s 500 Index has gained 6.6 percent.

Net Results

Net income of $249 million, or 31 cents a share, was little changed from $248 million, or 30 cents, a year earlier, the company said. Revenue from ongoing operations rose 1.6 percent to $3.16 billion. Analysts had estimated $3.13 billion.

Rate increases are “not a top priority” at the moment, Smith said on a conference call today. “I am more focused on what one percentage point improvement of retention could do for business, plus constructing attractive packages for people who aren’t customers today.”

In October, the company said it planned to trim 3,000 positions, or about 5 percent of the workforce. The cuts were scheduled mainly for the financial and risk division, and followed a round of 2,500 reductions announced in February 2013.

Reuters said it expects the total number of employees in the financial and risk unit to be less than 19,000 by the end of the year, a decline of more than 4,000 employees.

Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters in providing news and information.

To contact the reporters on this story: Bruce Rule in New York at brule1@bloomberg.net; Caitlin McCabe in New York at cmccabe11@bloomberg.net

To contact the editors responsible for this story: Cecile Daurat at cdaurat@bloomberg.net Bruce Rule, Stephen West

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