Thomson Reuters Corp reported a higher-than-expected profit for the first quarter on strong sales in its tax and accounting division, and the company affirmed its outlook for the year. The global news and information provider said on Tuesday that first-quarter revenue from ongoing businesses grew 4 percent before currency changes to $3.19 billion, above the analysts average forecast of $3.13 billion, according to Thomson Reuters I/B/E/S. Adjusted earnings per share rose to 44 cents from 37 cents a year earlier.
That beat analysts average forecast of 41 cents per share. While the legal and tax & accounting divisions lifted overall results, the companys business serving the financial industry remains under pressure from layoffs and other cost cuts at banks. The company said first-quarter revenue at its Financial & Risk division grew 1 percent to $1.8 billion, as declines in sales to traders and wealth managers were offset by increases in sales to risk and compliance customers, as well as acquisitions. In contrast, the legal unit, which includes WestlawNext and competes with Reed Elsevier, Wolters Kluwer and Bloomberg, reported 3 percent revenue growth to $777 million.
Tax & Accounting posted revenue growth of 31 percent to $310 million. 'Our Financial & Risk business continues to make progress in a very difficult environment,' Chief Executive James Smith said in a statement. 'We are executing against a more focused strategy.' One of Thomson Reuters key financial products, Eikon, has struggled to gain traction with customers. The company, which competes with Bloomberg, FactSet and News Corps Dow Jones for financial and banking customers, said that Eikon desktops now total over 16,000, up 30 percent from the fourth quarter. The first quarter reflects a new reporting structure at Thomson Reuters that was put in place after a major reorganization resulted in the exit of several high-level executives including former CEO Tom Glocer.
Smith, who headed the companys former Professional division, stepped into the role of chief executive at the beginning of the year. The new organization was aimed at simplifying the company created by Thomson Corps acquisition of Reuters Group Plc in 2008. The company now reports revenue in the following units: Financial & Risk, Legal, Tax & Accounting, Intellectual Property & Science, and Corporate & Other. Thomson Reuters said underlying operating profit rose 2 percent to $545 million. Underlying operating profit margin fell to 17.1 percent, from 17.4 percent a year ago, due to higher depreciation and amortization from new product launches, the company said. The company affirmed its 2012 forecasts, including revenue growth in the 'low-single digits.' Last week the company announced the sale of its Healthcare business for $1.25 billion. (Reporting By Jennifer Saba, editing by Tiffany Wu)