October 23, 2015 / 11:05 AM / 2 years ago

UPDATE 3-Thomson Reuters third-quarter sales dip; shares down

3 Min Read

(Adds analyst comment, context about financial services clients, updates stock movement)

By Jessica Toonkel

Oct 23 (Reuters) - Thomson Reuters Corp on Friday reported third-quarter sales that missed estimates due in part to the strong dollar, but the news and information company's profit beat Wall Street expectations.

Shares were down 2.2 percent in New York trading.

Thomson Reuters, the parent of Reuters News, competes for financial customers with Bloomberg LP, as well as News Corp's Dow Jones unit.

Continued uncertainty about global growth has put pressure on sell-side financial services firms, the core customers of the company's Financial & Risk business. Since their peak this year in late July, U.S, financial shares are down more than the broader U.S. market.

Morgan Stanley and JPMorgan Chase & Co both reported drops in profits due to the weak trading environment.

"While the company's current business is doing okay, there is no sign that the transactions-related business will get better anytime soon," said Sanford Bernstein analyst Claudio Aspesi. "It does raise questions about the growth of the financial services industry."

The uncertainty in global markets provides an opportunity for Thomson Reuters to serve its financial services clients, Chief Executive Jim Smith said in an interview. "To the extent that we can help banks take out costs and manage their complexity and risk, that's an opportunity for us."

In its Financial & Risk segment, which provides news and analytics to banks and other financial companies, revenue fell 7 percent but was flat when stripping out currency. Margins improved.

The division's net sales were positive in all regions except Europe, the Middle East and Africa, marking the sixth consecutive quarter the division has seen positive net sales.

Third-quarter net earnings were $293 million, or 36 cents per share, compared with $250 million, or 28 cents per share, a year ago.

Adjusted for special items, earnings were 52 cents per share. Analysts, on average, were looking for 49 cents per share, according to Thomson Reuters I/B/E/S.

Overall operating profit margin increased from a year ago. Revenue from ongoing businesses fell 4 percent to $2.98 billion, but was up 1 percent when factoring out currency. Analysts were expecting $3.04 billion.

The company reaffirmed its full-year forecast.

A significant recent development on Wall Street was the launch of Symphony Communications Services LLC, a cloud-based messaging platform backed by a number of banks that went live in September.

Smith said Thomson Reuters is open to linking its own messaging to Symphony's. "We believe an open solution is the ultimate answer," Smith said.

Smith said Thomson Reuters expects to announce a replacement by year-end for Andrew Rashbass, who departed as the chief executive of the Reuters news division in April.

Reporting By Jessica Toonkel; Editing by Nick Zieminski

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