Thomson Reuters posts profit, updates savings goal

By Robert MacMillan

NEW YORK (Reuters) - Global news and information company Thomson Reuters Corp (TRI.TO) (TRIL.L) forecast 2008 revenue growth of 6 to 8 percent and said it would reach a cost-savings target ahead of schedule, sending its shares up about 5 percent on Thursday.

In its first earnings report as a combined company, Thomson Reuters estimated it would achieve $1.0 billion in annual cost savings by the end of 2010 and $1.2 billion by the end of 2011. It said that date was earlier than originally anticipated.

Thomson, a Canadian publisher of professional services databases and financial information, bought Reuters on April 17 for more than $16 billion in cash and stock, hoping the merged company would be better positioned to ride out volatile global financial markets.

"Our combined first-quarter results and guidance for the full year reflect the robustness of our business, even in turbulent markets," Chief Executive Tom Glocer said in a statement.

The company said its pro forma first-quarter underlying operating profit was $579 million, a rise of 37 percent from a year ago, assuming that Thomson and Reuters had been one company at the time.

Pro forma revenue for the quarter ended March 31 rose 12 percent from a year ago to $3.3 billion.

UBS analyst Polo Tang said the results and 2008 outlook exceeded expectations because of higher-than-anticipated growth in Thomson Reuters' markets and tax and accounting units.

"This implies the company (is) assuming the strong growth in markets continues throughout the year which we believe is optimistic given heavy cuts in investment banking headcount in (the second quarter)," Tang wrote in a note to investors.

Thomson Reuters forecast its underlying profit margin to be between 19 and 21 percent for 2008, with free cash flow margin, excluding synergy and integration costs, to be between 11 and 12 percent of revenue.

"The results themselves seem to be in line with expectations, but what the market likes about them is the fact that they have increased their cost-savings target," said Charles Stanley analyst Sam Hart.

But ABN AMRO analyst Justin Diddams said, "I think people have got a bit over-excited about the cost savings number. ... The results are very much in line with expectations and in the medium term there's still pressure on bums on seats (in the financial services industry)."

In the first quarter, the new company's markets division, which includes the Reuters and Thomson news operations, as well as their financial services data and tools, reported operating profit of $353 million, up 69 percent.

The professional division, which includes databases and tools for accountants, lawyers and tax professionals, reported operating profit of $299 million, up 6 percent.

London shares of Thomson Reuters were up 4.6 percent at 1,637 pence. Toronto-listed shares rose 2.7 percent to C$38.31.

(Additional reporting by Michael Taylor in London; Editing by Brian Moss)