UPDATE 3-Thomson Reuters profit beats on cost-cutting

Wed Apr 30, 2014 11:17am EDT

(Adds analyst comment, share price, link to graphic)
    By Jennifer Saba
    April 30 (Reuters) - Thomson Reuters Corp  
reported higher-than- expected quarterly earnings on Wednesday,
bolstered by cost-cutting, and its shares rose about 2 percent.
    Still, the global news and information company said revenue
rose just 1 percent in the first quarter, mainly because of
acquisitions. 
    The slow growth reflects the challenges Thomson Reuters
faces from job cuts and other cost reductions at financial
institutions and law firms, which account for the majority of
its revenue.     
    Chief Executive Officer Jim Smith said in an interview that
the Financial & Risk business was still under pressure from
restructuring at large European banks, although sales in North
America, Latin America and Asia had improved.
    In those regions, overall sales minus cancellations grew
during the quarter.
    Smith said net sales were trending better than last year,
although he did not provide further details. 
    "We are going in the right direction, and we expect to see
continued steady improvement," Smith said. "We have turned the
ship, but there is still a lot of work to do."
    Revenue in the Financial & Risk division decreased 1 percent
to $1.6 billion. The division, which accounts for more than half
of Thomson Reuters' total revenue, sells its flagship desktop
product, Eikon, to bankers, retail brokers and other financial
professionals. 
    The division's "net sales are still a struggle because
Europe is their biggest market," said Evercore Research analyst
Doug Arthur. "I think they are trying hard and making the right
moves and cutting costs aggressively, but it's not enough to get
me off" an "equal weight" rating for the company.
    Thomson Reuters said revenue in the Legal division, known
for its Westlaw legal database, rose 2 percent to $803 million,
lifted by acquisitions last year like information provider
Practical Law.
    Revenue in the Tax & Accounting division increased 13
percent to $348 million.
    Thomson Reuters reported first-quarter earnings per share of
46 cents, excluding amortization and other items. Analysts on
average were expecting 38 cents, according to Thomson Reuters
I/B/E/S.
   
    Overall revenue from ongoing businesses increased 1 percent
to $3.1 billion, in line with analysts' estimates.
    "Cost-cutting remains impressive, but there is still limited
visibility on a recovery in revenue growth," TD Securities
analyst Vince Valentini wrote in a note to investors. "Headline
profit results seemed to be well ahead of expectations, but this
was only because of a shift in the timing of preannounced
restructuring costs."   
    Net income attributable to shareholders for the first
quarter was $282 million, compared with a year-earlier loss of
$31 million.
    Thomson Reuters affirmed its full-year outlook and expects
revenue to be unchanged from last year's $12.5 billion. 
    Shares of Thomson Reuters were up about 2 percent at $35.56
on the New York Stock Exchange and C$38.93 on the Toronto
exchange.

 (Reporting by Jennifer Saba in New York; Editing by Lisa Von
Ahn)