Thomson Reuters beats profit forecast, misses on revenue

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Thomson Reuters Corp. beat Wall Street profit expectations in the fourth quarter even as revenue slightly missed forecasts.

The news and information company, in its first earnings report since announcing it would sell a majority stake in a unit to Blackstone, reported quarterly revenue of $2.94 billion US, up three per cent.

Net earnings were $591 million US, or 81 cents per share, down from $2.24 billion US, or $3.03 per share a year earlier.

Adjusted for special items, earnings were 60 cents per share.

Analysts, on average, were looking for profit of 58 cents per share, and revenue of $2.95 billion US, according to Thomson Reuters I/B/E/S.

Last week, U.S. private equity firm Blackstone Group LP announced a $20-billion deal to buy a 55 per cent stake in Thomson Reuters’ Financial and Risk business, which provides news and analytics to financial services companies. That deal is expected to close in the second half of 2018.

Thomson Reuters said last week it would not provide earnings guidance for 2018.

Disruption ‘inevitable’: CEO

In a note to employees Thursday morning, Thomson Reuters CEO Jim Smith wrote that it “is inevitable that there will be some disruption as we work on building the correct alignment between the new F&R partnership and Thomson Reuters.”

Net sales in the Financial & Risk division, Thomson Reuters’ biggest unit, were positive for the quarter.

Revenue for the unit rose one per cent to $1.55 billion US excluding currency. Under the deal with Blackstone, Thomson Reuters will retain a 45 per cent stake in Financial & Risk.

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

Cutting costs

Thomson Reuters has relied heavily on cost-cutting in recent years as its core customers, including banks, brokerages and investment houses, retrench in the face of weakening trading conditions, tougher regulations and the rise of passive investing.

After the Blackstone deal, Thomson Reuters will focus on expanding its Legal, Tax & Accounting and Regulatory businesses, the company said when it announced the deal.

Revenue in its Legal business was $881 million US in the fourth quarter, up one per cent excluding currency. The company’s Tax & Accounting unit reported revenue of $443 million US, up sixper cent excluding currency.

Reuters News revenue was $75 million US in the quarter, down five per cent excluding currency.

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