* Q1 adj EPS 44 cents vs Wall Street view 41 cents
* Total revenue from ongoing business up 4 pct
* Reaffirms 2012 outlook
* Shares rise
By Jennifer Saba
May 1 (Reuters) – Thomson Reuters Corp’s
quarterly results beat analysts’ expectations as the company
racked up strong software sales to tax professionals,
accountants and financial institutions looking to comply with
government regulations.
The company’s Tax & Accounting unit posted a 31 percent rise
in first-quarter revenue to $310 million, citing growth in the
United States and Latin America and through acquisitions like
property and real estate tax software Manatron.
While Thomson Reuters’ business serving the financial
industry remained under pressure from layoffs and other cost
cuts at banks, its overall results were lifted by the Tax &
Accounting and Legal divisions.
The global news and information provider reported on Tuesday
that first-quarter adjusted earnings per share rose to 44 cents,
up from 37 cents a year earlier and above the average analyst
forecast of 41 cents per share, according to Thomson Reuters
I/B/E/S. Shar es rose 1.8 percent to $30.37 in New York trading.
“Everything seems to be working in line or better than
expected and that is really good news,” said Claudio Aspesi, an
analyst with Sanford Bernstein.
Thomson Reuters said first-quarter revenue at its Financial
& Risk division, which serves financial institutions, grew 1
percent to $1.8 billion, as declines in sales to traders and
wealth managers were offset by increases in sales to risk and
compliance customers, as well as acquisitions.
“I am really pleased with how the team has responded and the
progress we are making inside the company,” Thomson Reuters
Chief Executive James Smith said. “The biggest challenges right
now are outside the company, the macro economic environment,
particularly in Europe.”
EIKON IN 16,000 DESKTOPS
Total revenue from ongoing businesses grew 4 percent before
currency changes to $3.19 billion, above the analysts’ average
forecast of $3.13 billion.
The legal unit, which includes WestlawNext and competes with
Reed Elsevier , Wolters Kluwer and
Bloomberg, reported 3 percent revenue growth to $777 million.
One of Thomson Reuters’ key financial products, Eikon, has
struggled to gain traction with customers. The company, which
competes with Bloomberg, FactSet, Interactive Data Corp
and News Corp’s Dow Jones for financial and banking
customers, said that Eikon desktops now total over 16,000, up 30
percent from the fourth quarter.
Smith said net sales for Financial & Risk in the first
quarter were a “slight improvement” over the fourth quarter.
Revenue is a lagging indicator for Thomson Reuters since its
subscription sales are based on annual or multi-year contracts.
“There was no further reset on the Financial & Risk business
— the turnaround continues,” Evercore Partners analyst Doug
Arthur said, noting that and the rise in legal revenue were the
two highlights of the results.
The first quarter reflects a new reporting structure that
was put in place after a major reorganization resulted in the
exit of several high-level executives including former CEO Tom
Glocer.
Smith, who headed the company’s former Professional
division, stepped into the role of chief executive at the
beginning of the year.
The new organization was aimed at simplifying the company
created by Thomson Corp’s acquisition of Reuters Group Plc in
2008. The company now reports revenue in the following units:
Financial & Risk, Legal, Tax & Accounting, Intellectual Property
& Science, and Corporate & Other.
Thomson Reuters said underlying operating profit rose 2
percent to $545 million. Underlying operating profit margin fell
to 17.1 percent, from 17.4 percent a year ago, due to higher
depreciation and amortization from new product launches, the
company said.
The company affirmed its 2012 forecasts, including revenue
growth in the “low-single digits.”
Last week the company announced the sale of its Healthcare
business for $1.25 billion.
On the Toronto exchange, the shares rose 1.1 percent to
C$30.00.
