Thomson Reuters operating profit down, trading pressured
By Jennifer Saba
(Reuters) - Thomson Reuters Corp (TRI.TO: Quote) (TRI.N: Quote) reported on Friday a 15 percent fall in operating profit because of declining revenue and higher costs at its division that serves the financial industry.
The slip in profit in the third quarter underscored the problems facing some of Thomson Reuters' clients, such as banks and brokerages that are reducing staff and trimming costs to cope with increased regulation and the struggling global economy.
This business climate is leading the global news and information provider to keep a tight grip on costs while at the same time investing in customer service for its flagship financial product Eikon.
Thomson Reuters reaffirmed its 2012 forecast, due in part to stability at its Legal division, which includes WestlawNext. Revenue there rose 1 percent to $830 million on growth in Latin America and products such as legal resource provider FindLaw Elite.
The company's smaller units, meanwhile, showed strong growth. Governance, Risk & Compliance's revenue jumped 17 percent while revenue at the Tax & Accounting division rose 8 percent.
Still, its trading business, which rivals the Legal division as the biggest contributor of revenue, saw an 8 percent decline in revenue to $816 million in the quarter.
The trading performance weighed down the company's operating profit, which fell to $585 million from $690 million. The corresponding margin slipped to 18.5 percent from 21.6 percent in the same period a year ago.
The company said that in the third quarter last year, its underlying profit margin was "the high-water mark" for 2011. Continued...