BUSINESS

Thomson Reuters Q2 underlying operating profit steady, but headwinds persist

07/30/2013 07:43 EDT | Updated 09/29/2013 05:12 EDT
TORONTO - Thomson Reuters Corp. (TSX:TRI) says its underlying operating profit was virtually unchanged in the second quarter from a year earlier when it benefited from the sale of some business units.

The international news and financial information firm reported Tuesday that adjusted earnings were US$569 million, or 48 cents US per share, for the three month period ended June 30.

That's unchanged from a year ago, but still four cents higher than analyst expectations compiled by the Thomson Reuters financial data division.

Last year's second quarter included gains from the sale of its health care business to Veritas Capital for $1.25 billion.

With the gains included, Thomson Reuters' second-quarter operating profit was down 54 per cent from the same time a year ago, falling to US$597 million from $1.3 billion in the second quarter of 2012.

Revenue from its ongoing business rose two per cent to $3.1 billion, up from $3.07 billion a year earlier, before adjusting for currency fluctuations.

The company spent much of last year reworking its businesses, a decision that included several divestitures and acquisitions.

"We continue to make consistent, tangible progress in rolling out new products while at the same time reducing our cost structure," said president and chief executive officer Jim Smith on a conference call with analysts.

He noted that the company's sales trends are moving in a positive direction, though some external factors could still hurt progress in future quarters.

"Unfortunately, the headwinds affecting the largest global banks, particularly in Europe, continue to dampen our progress," he said.

"The continued cost-cutting, retrenchment, and headcount reductions by the biggest European players shaped the playing field on which we compete. Therefore the task of posting positive net sales for the entirety of the second half looks challenging."

The company operates a global news organization as well as a variety of professional information services for various industries.

Reuters News accounted for $82 million of revenue in the quarter, up two per cent from a year earlier.

Its financial and risk division, which is more than half of the company's revenue, slid about one per cent to $1.6 billion, mostly from declining subscription revenues in Europe, the Middle East and Africa.

Shares of Thomson Reuters were down 85 cents to $35.52 near midday on the Toronto Stock Exchange.