Thomson Reuters profit falls on severance costs
By Jennifer Saba
(Reuters) - Thomson Reuters Corp TRI.TO (TRI.N: Quote) reported on Tuesday a 7 percent decline in first-quarter operating profit because of severance costs and a decrease in revenue at its Financial & Risk division, which caters to banking clients.
Shares of the global news and information company fell 2.6 percent in morning trading, even as Thomson Reuters stood by its outlook for the remainder of the year. The company reaffirmed its forecast for 2013 revenue growth in the low single digits.
"We have seen improving sales trends now for the last several quarters," Thomson Reuters Chief Executive James Smith said in an interview.
Excluding the severance charges, first-quarter profit topped Wall Street's expectations, helped by operating expenses that fell 8 percent. Revenue was in line with analysts' forecasts, up 2 percent to $3.1 billion before currency changes, on the strength of the company's Legal and Tax & Accounting divisions.
"The good news is they are ahead on their cost savings plans," said Claudio Aspesi, a senior analyst at Sanford Bernstein & Co.
"On the flip side, revenue is fundamentally showing little progress. You need good revenue growth to justify a premium to the market."
Thomson Reuters competes for financial customers against main competitor Bloomberg LP, as well as News Corp's (NWSA.O: Quote) Dow Jones unit, FactSet Research Systems Inc FDS.N and Interactive Data Corp.
The banking industry has been slashing costs and headcount, putting pressure on companies that target the sector. Continued...