Thomson Reuters (TSX:TRI) reported Tuesday a drop in operating profit in the first quarter as it cited severance costs and an increase in depreciation and amortization expenses.
The global news and information company said the underlying operating profit in the three months ended March 31 was $462 million, with adjusted earnings of 38 cents per share.
That compared with underlying operating profit of US$497 million, or 39 cents per share, in the same 2012 period.
Adjusted earnings were 38 cents per share, beating analyst expectations of 32 cents a share, according to a survey of analysts by Thomson Reuters.
The company has been slimming down its operations and in its last financial year announced several divestitures and acquisitions, including the sale of its health-care segment in a US$1.25-billion deal with Veritas Capital.
As part of the changes, Thomson Reuters booked severance expenses US$78 million in the first quarter, compared with US$28 million incurred in the first quarter of 2012, while depreciation and amortization expenses rose US$20 million.
Revenue from ongoing businesses was US$3.1 billion, up from US$3.07 billion.
"The external environment continues to be challenging but we are on track," chief executive James Smith told a conference call with analysts.
"That said, we are controlling what is within our control, remaining focused on consistent execution, rolling out new products and we believe they will drive organic growth — and we are reducing our cost structure."
Under international financial reporting standards (IFRS) measures, the company took a US$235-million tax charge in the period, resulting in an IFRS loss of four cents per diluted share, compared with a profit of 35 cents in the prior-year period.
Operating profit under IFRS was US$390 million, up seven per cent from US$364 million, although revenues were down four per cent at US$3.18 billion from US$3.32 billion.
The company's first-quarter results met its expectations, and the second half of the year is expected to perform better than the first half, Smith said.
He also told analysts that Thomson Reuters will be pulling back on its acquisition activity to a level that observers "have come to expect from us."
"We had an abnormally high level as we saw opportunities to move into faster growing sectors of our market," he said.
Shares of the company ended the day 35 cents lower to $33.75 on the Toronto Stock Exchange.