Thomson Reuters operating profit falls on severance costs, takes tax charge

Tue Apr 30, 2013 7:01am EDT
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By Jennifer Saba

April 30 (Reuters) - Thomson Reuters Corp on Tuesday reported 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.

That decline did not change the company's outlook for the remainder of the year and it reaffirmed its forecast for 2013 revenue growth in the low single digits.

The global news and information company spent $78 million on severance costs in the period and also booked a tax charge of $235 million. It said in February there would be $100 million in severance costs related to about 2,500 job cuts.

"We are executing more effectively, launching better products, simplifying our systems and processes and managing with more rigor and discipline, which is why our confidence continues to build," Thomson Reuters Chief Executive James Smith said in a statement.

The company is the midst of a turnaround after Thomson Corp's $17 billion acquisition of Reuters Group Plc. The 2008 merger coincided with a financial crisis that prompted banks, which are core customers of Thomson Reuters, to slash costs and cut staff.

Adding to the challenge was the premature roll out to its financial clients of its flagship desktop product Eikon.

By the end of the first quarter, the company said that Eikon desktops totaled nearly 47,000, up 38 percent from the end of last year. That was a slightly larger increase than the 33 percent rise seen between the third and fourth quarters of 2012.

The company reported that revenue from ongoing businesses rose 2 percent to $3.1 billion before currency changes on the strength of its Legal and Tax & Accounting divisions. First-quarter revenue met analysts' expectations, according to Thomson Reuters I/B/E/S.   Continued...