Reuters sees better times ahead

Thomson Reuters reported a 2 per cent rise in quarterly operating profit yesterday, 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 per cent rise.

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Thomson Reuters chief executive James Smith said that he expects the turnaround to pick up in the second half of this year because of product improvements and stabilisation 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 per cent 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 reorganisation costs”, the company said. Organic revenue was flat.

“It’s like night and day. We are in a different place,” Smith said adding that the company was half way through its turnaround.