March 30, 2009 / 4:01 PM / in 9 years

UPDATE 2-Thomson Reuters sees sales up despite softer markets

(Adds details on debt, competitors; updates shares)

By Georgina Prodhan

LONDON, March 30 (Reuters) - Professional information provider Thomson Reuters (TRI.TO)TRIL.L said it expects higher revenues this year despite job losses in the financial services industry on which it depends for most of its revenues.

In its annual report published on Monday, the company said financial conditions were challenging, but it was well positioned geographically and by business segment to survive the global economic downturn.

“We expect large global banks and institutions in the United States, United Kingdom and Western Europe to be most affected. However, we anticipate that emerging markets will continue to grow, albeit at a slower pace,” the company said.

The Anglo-Canadian company repeated the forecast it made in February -- predicting an underlying operating margin and cash flow comparable to those of 2008.

“We do not believe that our information is a discretionary purchase for our Markets division customers, but rather a necessity for them to run their businesses on a daily basis,” Thomson Reuters said.

The company’s Markets division, which supplies news and data to financial institutions, brings in about 57 percent of sales and 42 percent of profits.

The rest is accounted for by the Professional division, which sells news and information to lawyers, medical and healthcare professionals and accountants.

Thomson Reuters’ rivals in sales and trading information products include privately owned Bloomberg and the Associated Press. For professional information, its primary competitors are Reed Elsevier (REL.L)ELSN.AS and Wolters Kluwer (WLSNc.AS).

Thomson Reuters said it expected the economic environment for its Professional division customers to soften this year, although it said those markets were historically resilient.

“We believe the professional markets we serve continue to offer opportunities for growth, albeit at lower rates than in 2008,” it said.

“We expect the margins for Professional to be impacted in 2009 by investments in global expansion initiatives as well as a shift to higher growth software and services products.”

SUFFICIENT CREDIT

Thomson Reuters’ London-listed shares closed down 1.4 percent at 1514 pence, broadly in line with the European media index .SXMP. In Toronto, the stock fell 0.40 Canadian dollars to 30.80.

The company said it believed cash from its operations and available credit facilities would be sufficient to fund its cash dividends, debt servicing, capital expenditure, normal acquisitions and share buybacks.

Thomson Reuters has access to a $2.5 billion syndicated credit facility until August 2012. It also issued about $3 billion of long-term debt securities last year.

The company’s net debt more than doubled to $6.76 billion by the end of 2008 from a year earlier, mainly due to Thomson’s 2008 acquisition of Reuters. Most is in U.S. dollars or has been swapped into U.S. dollar obligations.

Thomson Reuters’ loan covenants require it to keep net debt at no more than 4.5 times earnings before interest, tax, depreciation and amortisation. The company said it had met that requirement in all periods of 2008, and targets a ratio of 2:1.

In December, Thomson Reuters filed a new shelf prospectus to issue up to $3 billion of debt securities, valid until January 2011. It has not issued any securities under this prospectus. (Reporting by Georgina Prodhan; Editing by Andrew Callus)

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