Thomson Reuters Corp. reported higher-than-expected quarterly earnings on Wednesday, bolstered by cost-cutting, and its shares rose about 4 per cent.
Still, the global news and information company said revenue rose just 1 per cent in the first quarter, mainly because of acquisitions.
The slow growth reflects the challenges Thomson Reuters faces from job cuts and other cost reductions at financial institutions and law firms, which account for the majority of its revenue.
Chief executive officer Jim Smith said in an interview that the Financial & Risk business was still under pressure from restructuring at large European banks, although sales in North America, Latin America and Asia had improved.
In those regions, overall sales minus cancellations grew during the quarter.
Mr. Smith said net sales were trending better than last year, although he did not provide further details.
“We are going in the right direction, and we expect to see continued steady improvement,” Mr. Smith said. “We have turned the ship, but there is still a lot of work to do.”
Revenue in the Financial & Risk division decreased 1 per cent to $1.6-billion (U.S.). The division, which accounts for more than half of Thomson Reuters’s total revenue, sells its flagship desktop product, Eikon, to bankers, retail brokers and other financial professionals.
The division’s “net sales are still a struggle because Europe is their biggest market,” said Evercore Research analyst Doug Arthur. “I think they are trying hard and making the right moves and cutting costs aggressively, but it’s not enough to get me off” an “equal weight” rating for the company.
Thomson Reuters said revenue in the Legal division, known for its Westlaw legal database, rose 2 per cent to $803-million, lifted by acquisitions last year like information provider Practical Law.
Revenue in the Tax & Accounting division increased 13 per cent to $348-million.
Thomson Reuters reported first-quarter earnings per share of 46 cents, excluding amortization and other items. Analysts on average were expecting 38 cents, according to Thomson Reuters I/B/E/S.
Overall revenue from ongoing businesses increased 1 per cent to $3.1-billion, in line with analysts’ estimates.
“Cost-cutting remains impressive, but there is still limited visibility on a recovery in revenue growth,” TD Securities analyst Vince Valentini wrote in a note to investors. “Headline profit results seemed to be well ahead of expectations, but this was only because of a shift in the timing of preannounced restructuring costs.”
Net income attributable to shareholders for the first quarter was $282-million, compared with a year-earlier loss of $31-million.
Thomson Reuters affirmed its full-year outlook and expects revenue to be unchanged from last year’s $12.5-billion.
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