UPDATE 1-Cost curbs boost Thomson Reuters profit as revenue outlook brightens
NEW YORK Feb 13 (Reuters) - Thomson Reuters reported a 2 percent rise in quarterly operating profit on Wednesday, largely due to cost cutting, and forecast higher revenue in 2013 as its division that serves financial institutions begins to turn around.
The global news and information company said it expects revenue to increase in the low single digits this year. Analysts had been forecasting a 2 percent rise.
Thomson Reuters Chief Executive James Smith said in an interview that he expects the turnaround to pick up in the second half of this year because of product improvements and stabilization in Europe.
"The success we are having today doesn't start showing up until next year," Smith said.
Smith expects Financial & Risk net sales to turn positive in the second half of the year. Net sales are an important gauge of the company's future performance because subscription-based revenue typically lags sales by 12 months.
Financial & Risk, which accounts for 54 percent of total revenue, has struggled in recent years following a troubled launch for its flagship desktop product Eikon, which is aimed at bankers, hedge fund managers, and other financial industry professionals.
Cost cutting by banks after the financial crisis compounded the difficulties, especially in Europe.
Profit in the quarter increased on the back of "continued cost containment and lower reorganization costs", the company said. Organic revenue was flat.
"It's like night and day. We are in a different place," Smith said on a call with analysts, adding that the company was half way through its turnaround.
Smith said the company expects to cut 2,500 jobs, or about 4 percent of its staff, in 2013.
Thomson Reuters said revenue from ongoing businesses in the fourth quarter rose 2 percent before currency changes to $3.36 billion, roughly in line with expectations. It was not immediately clear what the change in costs was on the same basis.
Adjusted earnings increased to $497 million, or 60 cents per share, from $445 million, or 54 cents per share, a year earlier, beating analysts' average forecast for 55 cents per share, according to Thomson Reuters I/B/E/S.
The number of Eikon desktops installed rose 33 percent in the fourth quarter from the previous quarter to 33,900.
For the fourth quarter, revenue at the Financial & Risk division increased 1 percent due to growth in its Governance, Risk & Compliance business and its acquisition of electronic foreign exchange platform FXall.
Revenue in the division's Europe, Middle East and Africa region and in Asia was down 3 percent, respectively, while the Americas gained 6 percent.
Its Legal division, which includes WestlawNext, reported that revenue rose 2 percent in the quarter to $861 million.
Thomson Reuters recently acquired London-based Practical Law Company, which provides guidance and analysis tailored to specific areas of the law.
The board approved a 2 cent annual dividend increase to $1.30 per share.
Thomson Reuters' New York and Toronto listed shares are up 15 percent in the past 12 months at $30.65 and C$30.72, respectively.