4 Min Read
By Jennifer Saba
July 30 (Reuters) - Thomson Reuters said on Tuesday that second-quarter revenue rose 2 percent as gains at its legal and accounting businesses helped offset weakness in the financial division, mainly in Europe.
The global news and information company reaffirmed its forecast for all of 2013 of revenue rising in the low single digits with an underlying operating profit margin between 16.5 and 17.5 percent.
Revenue from Legal, which includes WestlawNext, increased 5 percent to $846 million lifted by new products aimed at helping law firms manage litigation and their business. Tax & Accounting revenue rose 7 percent to $288 million.
"Everything that is in our control remains on track," Chief Executive James Smith told Reuters. "We expect the second half to remain better than the first half."
He said the trends continue to remain positive but added: "Unfortunately, so do the challenges facing the financial industry as a whole and particularly in Europe."
Banks, especially those in Europe, are still cutting costs. Thomson Reuters has been making progress in Asia and Japan, where net sales for its financial division have turned positive in the second quarter. The Americas has also improved.
Smith has previously said he expects net sales at the Financial & Risk division to turn positive in the second half of this year. Net sales -- an important metric because it points to future revenue -- strip out cancellations and lag revenue by about 12 months.
On Tuesday he called meeting that goal "challenging" and said it "comes down to a handful of contracts with larger banks - we are that close."
Bernstein senior analyst Claudio Aspesi expects organic revenue growth to be muted. "Despite management describing 2012 as a 'watershed' for the division, we remain cautious on the turnaround story," Aspesi wrote in a note to investors.
Shares of Thomson Reuters fell about 2.5 percent in late morning trading after hitting a two-year high on Monday. Its New York-listed shares are trading at $34.48 and its Toronto-listed shares are trading at C$35.50.
Thomson Reuters, which competes with companies such as Bloomberg LP, FactSet Research and Reed Elsevier , reported total revenue from ongoing business rose 2 percent before currency changes to $3.1 billion. That increase was in line with analysts' expectations.
Adjusted earnings for the quarter were roughly flat from the year ago at $569 million, or 48 cents per share, ahead of analysts expectations of 44 cents, according to Thomson Reuters I/B/E/S.
Revenue at Financial & Risk, which accounts for 53 percent of total revenue at Thomson Reuters, fell 1 percent to $1.6 billion because of lower revenue mainly in Europe.
Eikon desktops totaled about 61,000 at the end of the second quarter, up 30 percent from the end of the last quarter compared with a 38 percent rise in the first quarter.
Of the total, 10,000 are new customers, Smith said on a call with analysts.
Piper Jaffray analyst Peter Appert said that while the financial markets area remains challenging, Eikon is gaining traction. "They got the bugs out of it and are having much better success," he said.