TORONTO (Reuters) - Electronic publisher Thomson Corp TOC.TO TOC.N reported stronger earnings and raised its dividend on Thursday, and said its product mix makes it less vulnerable to a slowing economy than it has been in the past.
“It’s a question of how severe the downturn is,” Chief Executive Richard Harrington told Reuters in an interview. “We’re not going to be immune to it, but we won’t be as impacted as we were historically.”
Thomson, which is buying financial data and news provider Reuters Group Plc RTR.LRTRSY.O in a deal worth about $16 billion, reported an 11 percent jump in fourth-quarter profit and boosted its dividend by 10 percent.
Helped by strong growth in its legal, financial, tax and accounting, and scientific businesses, Thomson earned $434 million, or 67 cents a share, for the period to December 31, up from $391 million, or 61 cents a share, for the same 2006 quarter. Revenue rose 10 percent to $2.03 billion.
Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier, said that the Reuters purchase will further diversify Thomson geographically, thus helping it cope with a slowdown.
“The geographic diversification is great — Reuters is strong in Europe and Asia, Thomson is strong in North America — so I think it’s perfect there.”
Nakamoto said many of the products that Thomson sells are under contract, adding he expects capital-market employment losses as a result of economic turmoil will be “somewhat limited.”
Adjusted to exclude nonrecurring items, discontinued operations, and other items affecting comparability, Thomson earned 60 cents a share from continuing operations, up from 50 cents a share.
Operating profit rose 22 percent at the financial division, 20 percent at scientific, and 7 percent at legal. Tax and accounting operating profit fell 6 percent, and health care declined 7 percent, Thomson said.
Analysts had expected Thomson to earn 57 cents a share before one-time items on revenue of $2.01 billion.
Thomson provides data, software and other applications in a variety of fields, including law, tax, financial services and health care, and Harrington told a conference call the product lineup and geographically diversified business model would ease the impact of a slowdown.
The company, based largely in Stamford, Connecticut, said it continues to expect its takeover of Reuters will close early in the second quarter. It expects U.S., Canadian and European regulatory approvals to come “in the next few weeks.” Reuters CEO Tom Glocer will head the combined company once the deal closes.
It also said its board had approved an annual 2008 dividend of $1.08 a share, an increase of 10 percent over 2007 and “the third consecutive year of double-digit dividend growth.”
Thomson shares were down 28 Canadian cents at C$34.86 on the Toronto Stock Exchange.
The company, controlled by Canada’s Thomson family, once owned a media empire that include The Times of London, before moving away from newspapers to focus on specialized ventures that now include Westlaw legal products and Thomson Financial. In 2007, about 82 percent of Thomson revenue came from electronic software and services, it said.
It says the Reuters purchase will create “the global leader in electronic information services, trading systems and news.”
(Reporters and editors involved in writing and editing this report may own Reuters securities and are bound by the Reuters Code of Conduct, which restricts dealing in securities in companies a journalist is reporting on)
Additional reporting by Jonathan Spicer and Scott Anderson; Editing by Rob Wilson