Thomson Reuters' earnings beat forecasts but raise questions about coming quarters

Thu Feb 9, 2017 2:51pm EST
 
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NEW YORK (Reuters) - Thomson Reuters Corp (TRI.N: Quote)(TRI.TO: Quote) reported higher-than-expected quarterly profit on Thursday but its revenue missed forecasts and investors showed concern that one gauge of future demand from financial clients declined for the first time in almost three years.

The news and information company's Financial & Risk unit, its biggest, showed cancellations outpacing sales for the first time in 11 quarters, helping push the stock down 3.8 percent.

Revenue rose 1 percent to $1.5 billion in Financial & Risk, which provides news and analytics to banking, investment and other professional clients and accounts for half of total company revenue.

But the division's "net sales" decline after 10 quarters of increases was called and area of concern by several analysts - including Bank of America Merrill Lynch, RBC and Macquarie Research.

"The net sales being down in the quarter is probably why the stock is down," said Doug Arthur, managing director at Huber Research Partners, LLC.

"They've had a blip," he said. "That's clearly a disappointment ... that has ramifications for quarters down the road."

Asked about the F&R business, Chief Executive Jim Smith said in an interview, "The big European banks, and to a lesser extent Russia and Brazil, impacted our financial business disproportionately this quarter," adding the company is well-positioned to help clients in an uncertain regulatory and economic environment.

The F&R unit did not see a big swing in demand, Smith later told analysts on a conference call.

"In this low-growth environment, in any given quarter, one or two contracts can determine if we're above-the-line positive or below-the-line negative," he said. "There wasn't some dramatic shift."   Continued...

 
FILE PHOTO -  The Thomson Reuters logo is seen on the company building in Times Square, New York October 29, 2013.  REUTERS/Carlo Allegri/File Photo