February 11, 2016 / 11:50 AM / in 2 years

Thomson Reuters beats EPS forecast, sees 2016 revenue growth

(Reuters) - Thomson Reuters Corp (TRI.N) (TRI.TO) reported higher-than-expected quarterly profit on Thursday, benefiting from lower costs and tax savings, and said it expects its revenue to grow by low single digits in 2016.

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

Despite volatile markets, the news and financial information provider said it expects 2 to 3 percent revenue growth this year, assuming constant currency rates.

“There is a lot to be worried about there,” Chief Executive Jim Smith said about global markets in an interview on Thursday.

“But when I spoke to our largest customers this year and when I spoke to major regulators this year, no one believes that we are in a place where the fundamentals are anywhere near where they were in 2008 and 2009.”

Adjusted for special items, Thomson Reuters’ fourth-quarter net earnings were 65 cents per share, up from 43 cents per share a year ago.

Analysts, on average, were looking for 58 cents per share, according to Thomson Reuters I/B/E/S.

The 7-cent beat came from cost controls and from lower-than-expected tax rates, said Sanford Bernstein analyst Claudio Aspesi.

Volatile currencies, falling oil prices and worries about slowing growth in China have put pressure on sell-side financial services firms, the core customers of Thomson Reuters Financial & Risk business. Goldman Sachs Group Inc (GS.N) and other banks are looking to slash expenses further this year..

Since the beginning of this year, U.S. financial shares .SPSY are down 15.2 percent while the broader U.S. market .SPX is down 9.4 percent.

Thomson Reuters, the parent of Reuters News, competes for financial customers with Bloomberg LP, as well as News Corp’s (NWSA.O) Dow Jones unit.

Smith noted that the fourth quarter is key for Thomson Reuters’ Financial & Risk division, which makes up about half of the company’s revenue, because that is when clients decide whether to renew for the year.

“It’s generally when the big banks tend to adjust their seat count for the coming year,” Smith said.

The division, which provides news and analytics to financial services companies, showed sales outpacing cancellations - a key indicator of future growth, marking the seventh consecutive quarter of positive net sales at Financial & Risk. Revenue was $1.53 billion for the quarter.

Quarterly revenue was slightly below estimates, down 2 percent to $3.15 billion, but would have been up 2 percent when factoring out currency. Analysts had forecast $3.17 billion.

The company said it plans to buy back about $1.5 billion of its shares, having largely completed its prior $1 billion buyback program.

The company’s 2016 forecast excludes revenue from its Intellectual Property & Sciences business, which it expects to sell in the second half of this year.

Thomson Reuters announced in November it was exploring strategic options for the business, which provides intellectual property and scientific information and associated tools and services to governments, universities and companies. It had revenue of $1 billion in 2015.

CEO Smith said he would favor using proceeds from the sale to buy back shares and said he has no plans for major acquisitions in 2016.

Reporting By Jessica Toonkel; Editing by Nick Zieminski

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