Peter Job
Job done at Shell
Friday 11 September 2009
Shell said after a meeting in the Hague that Job, a non-executive director, will step down as chairman of the board's remuneration committee on 1 October and leave the company entirely at the next AGM in May 2010. It appointed Hans Wijers, a former Dutch economics minister, as his replacement.
Job, 68, became a focus for unprecedented shareholder anger at Shell's annual meeting in May after awarding what were widely considered to be overly generous bonuses to Shell executives. Investors holding almost 60 per cent of shares voted down the pay settlement. There were cheers at the humiliating board defeat.
Following the vote, some of Shell's institutional investors called for Job's resignation. Franklin Mutual, part of the Templeton group of funds in America, said the defence offered by Job was “pathetic”.
Under a three-year scheme he set out in 2005, Shell directors would have earned up to 200 per cent of their salaries in shares if the company outperformed three of its competitors. The company finished fourth but the remuneration committee decided to exercise discretion and allow some of the award anyway.
Since May, Shell’s chairman Jorma Ollila has met many of the group’s top shareholders. One said: “We made clear we expected to see the chairman of the remuneration committee move on. The company is paying the price for two years of contentious pay schemes.”
Friday's announcement from Shell pointed out that by the time Job retires from Shell he will have served as a non-executive director for nine years — affecting his independence as a director. He joined Shell in 2001. He is also a non-executive director of Schroders and TIBCO Software and a member of the supervisory board of Deutsche Bank.
Under corporate governance guidelines, serving for more than nine years is seen as a potential conflict with requirements for certain directors to be independent. Those who do serve for longer than nine years are expected to face annual re-election.
Peter Montagnon, former Reuters correspondent now director of investment affairs at the Association of British Insurers, said: 'The rejection by shareholders of the remuneration report at the last AGM required a response from the company. This is now an opportunity for a fresh start.”
The Financial Times' Lombard columnist commented that the outcome looks very much like that envisaged by a review of governance and remuneration at financial institutions which said a vote against pay policy should oblige the chairman of the remuneration committee to stand for re-election the following year. "Shell’s elegant solution spares Sir Peter Job that indignity, but institutional investors can still claim a scalp in their campaign to get a proper hearing on pay: Sir Peter will step down as remco chairman in three weeks’ time and leave the board when his nine years are up next year. One small step for a man, one giant leap for pay restraint."
Job joined Reuters as a graduate trainee journalist in 1963. After assignments as a correspondent in Paris, New Delhi, Kuala Lumpur and Jakarta, he served as manager in Buenos Aires before taking over the Asian operation in 1978. He became chief executive in 1991 and retired in 2001.
● SOURCE Reuters | The Daily Mail | Financial Times | The Times | The Daily Telegraph | The Wall Street Journal
How Reuters convinced unions about Geneva HQ, by Michael Nelson
Saturday 27 June 2009
A Reuters plan to relocate to Geneva from London 30 years ago had nothing to do with internationalism but with British trade unionism, Michael Nelson, general manager at the time, said.
The company devised a stratagem to convince the unions that it would leave London, its headquarters since Paul Julius Reuter founded the business in 1851, if it could not get a deal with them during what became known as the 1979 “winter of discontent”.
The plan worked, and Reuters remained at 85 Fleet Street.
On Wednesday, the Financial Times reported in an article on Thomson Reuters’ decision to end trading of its shares on the London Stock Exchange: “If there is concern about the decision in London, it won't be on patriotic grounds. Reuters had been a global company for years before the Thomson deal (although according to a history of the group, Peter Job, managing director, dismissed a 1980 suggestion to relocate its HQ to Geneva as "pallid internationalism").”
The FT’s Lombard columnist, publishing Nelson’s clarification under the headline “Reuters’ Swiss solution”, said on Saturday:
“Thomson Reuters’ decision to scrap its London listing should not upset patriots because Reuters has always been a global company. But my parenthetical reference this week to an abortive plan to move the group’s headquarters to Geneva – mentioned in Donald Read’s history of Reuters, The Power of News – prompted a fascinating clarification from Michael Nelson, who was general manager of Reuters at the time.
“He says this had ‘nothing to do with internationalism but with British trade unionism’. In 1979, the year of the ‘winter of discontent’, Mr Nelson suggested Reuters build a data centre in the Swiss city as an alternative to London if a deal could not be struck with the unions.
“Union representatives were periodically flown out, given a tour of the empty building, ‘a good lunch on Lake Geneva’, and a warning ‘that if we could not get what we wanted in London, we would move to Geneva’.
“The ploy worked and, as Reuters expanded, the building was used to serve continental clients, eventually becoming the headquarters for Europe.”
Five years earlier, union officials and Reuters’ union representatives had been flown at company expense to study video editing in operation in New York. Kevin Garry, in charge of staff relations, “hinted that, if London refused to follow New York, the whole Fleet Street editorial operation might be moved outside the United Kingdom”, according to the company’s official history. Agreement was reached in mid-1975 but the introduction of video editing in London with journalists’ right to by-pass telegraphists and transmit news directly to line was delayed for technical reasons until the end of 1979.
Unions are again threatening strikes and (erroneous) parallels are being drawn with the situation 30 years ago, the FT said. But the story is a timely reminder of how much heavier the pressure was in the late 1970s; of the lengths employers went to in order to hedge their bets; and of how Reuters, a media pioneer in so many other ways, came close to showing the way forward to Eddie Shah and Rupert Murdoch. As Mr Nelson points out: “Geneva was not Reuters’ Wapping, but might have been.”
● SOURCE Financial Times
The company devised a stratagem to convince the unions that it would leave London, its headquarters since Paul Julius Reuter founded the business in 1851, if it could not get a deal with them during what became known as the 1979 “winter of discontent”.
The plan worked, and Reuters remained at 85 Fleet Street.
On Wednesday, the Financial Times reported in an article on Thomson Reuters’ decision to end trading of its shares on the London Stock Exchange: “If there is concern about the decision in London, it won't be on patriotic grounds. Reuters had been a global company for years before the Thomson deal (although according to a history of the group, Peter Job, managing director, dismissed a 1980 suggestion to relocate its HQ to Geneva as "pallid internationalism").”
The FT’s Lombard columnist, publishing Nelson’s clarification under the headline “Reuters’ Swiss solution”, said on Saturday:
“Thomson Reuters’ decision to scrap its London listing should not upset patriots because Reuters has always been a global company. But my parenthetical reference this week to an abortive plan to move the group’s headquarters to Geneva – mentioned in Donald Read’s history of Reuters, The Power of News – prompted a fascinating clarification from Michael Nelson, who was general manager of Reuters at the time.
“He says this had ‘nothing to do with internationalism but with British trade unionism’. In 1979, the year of the ‘winter of discontent’, Mr Nelson suggested Reuters build a data centre in the Swiss city as an alternative to London if a deal could not be struck with the unions.
“Union representatives were periodically flown out, given a tour of the empty building, ‘a good lunch on Lake Geneva’, and a warning ‘that if we could not get what we wanted in London, we would move to Geneva’.
“The ploy worked and, as Reuters expanded, the building was used to serve continental clients, eventually becoming the headquarters for Europe.”
Five years earlier, union officials and Reuters’ union representatives had been flown at company expense to study video editing in operation in New York. Kevin Garry, in charge of staff relations, “hinted that, if London refused to follow New York, the whole Fleet Street editorial operation might be moved outside the United Kingdom”, according to the company’s official history. Agreement was reached in mid-1975 but the introduction of video editing in London with journalists’ right to by-pass telegraphists and transmit news directly to line was delayed for technical reasons until the end of 1979.
Unions are again threatening strikes and (erroneous) parallels are being drawn with the situation 30 years ago, the FT said. But the story is a timely reminder of how much heavier the pressure was in the late 1970s; of the lengths employers went to in order to hedge their bets; and of how Reuters, a media pioneer in so many other ways, came close to showing the way forward to Eddie Shah and Rupert Murdoch. As Mr Nelson points out: “Geneva was not Reuters’ Wapping, but might have been.”
● SOURCE Financial Times
Reuters' many flags - FT
Wednesday 24 June 2009
Thomson Reuters’ decision to end its London Stock Exchange listing will deny British index funds and those institutions with an outdated mandate to invest only in UK-listed companies the opportunity to share in future growth of the business, the Financial Times said on Wednesday.
Something has gone a bit awry when UK investors keep their exposure to London-listed Kazakh miners that are part of the FTSE 100 index but lose their stake in a global media business with deep roots in Britain, it said in a report under the headline “Reuters' many flags”.
But Thomson Reuters’ experience does not necessary rule out a dual-listed structure the next time somebody wants to mount a cross-border takeover using shares, rather than cash, the FT said.
Companies as diverse as Thomson Reuters' competitor Reed Elsevier, cruise company Carnival, and miner Rio Tinto maintain a dual listing.
“But the structure is an impediment when raising funds - or defending against a hostile bid - it imposes an additional running cost ($10 million a year in Thomson Reuters' case), and it adds complexity when simplicity is in fashion.”
The FT quoted a 1915 leaflet celebrating the 50th anniversary of Reuter's Telegram Company: "Reuter's Agency has always been recognised as a British institution representing the English point of view. [Its managing director] is in all respects an Englishman. The Directors, the Editorial Staff, and the correspondents are British pure and simple, and so, with the exception of a score, are the 1,200 shareholders."
Reuters once had to defend itself against allegations of undue German influence during the First World War, the FT said. “Times have changed. No one will accuse Thomson Reuters of treasonable behaviour for ending its London listing. The media group has recognised the inevitable reality and UK-based shareholders have voted with their feet. Since last year's deal with Canada's Thomson, the proportion of Thomson Reuters PLC's shares held in London has dropped from 58 per cent to less than 25 per cent. The balance of shareholder power has inexorably shifted to New York and Toronto.
“If there is concern about the decision in London, it won't be on patriotic grounds. Reuters had been a global company for years before the Thomson deal (although according to a history of the group, Sir Peter Job, managing director, dismissed a 1980 suggestion to relocate its HQ to Geneva as "pallid internationalism").”
The FT noted that “Paul Julius Reuter, the agency's founder, had two names (he was born Israel Beer Josaphat), two nationalities (German and English) and two religions (Jewish and Christian), so you wouldn't bet against Thomson Reuters adding another listing in future (Shanghai, perhaps). But, barring takeover or break-up, London is, regrettably, unlikely to be one of them.”
● SOURCE Financial Times
Something has gone a bit awry when UK investors keep their exposure to London-listed Kazakh miners that are part of the FTSE 100 index but lose their stake in a global media business with deep roots in Britain, it said in a report under the headline “Reuters' many flags”.
But Thomson Reuters’ experience does not necessary rule out a dual-listed structure the next time somebody wants to mount a cross-border takeover using shares, rather than cash, the FT said.
Companies as diverse as Thomson Reuters' competitor Reed Elsevier, cruise company Carnival, and miner Rio Tinto maintain a dual listing.
“But the structure is an impediment when raising funds - or defending against a hostile bid - it imposes an additional running cost ($10 million a year in Thomson Reuters' case), and it adds complexity when simplicity is in fashion.”
The FT quoted a 1915 leaflet celebrating the 50th anniversary of Reuter's Telegram Company: "Reuter's Agency has always been recognised as a British institution representing the English point of view. [Its managing director] is in all respects an Englishman. The Directors, the Editorial Staff, and the correspondents are British pure and simple, and so, with the exception of a score, are the 1,200 shareholders."
Reuters once had to defend itself against allegations of undue German influence during the First World War, the FT said. “Times have changed. No one will accuse Thomson Reuters of treasonable behaviour for ending its London listing. The media group has recognised the inevitable reality and UK-based shareholders have voted with their feet. Since last year's deal with Canada's Thomson, the proportion of Thomson Reuters PLC's shares held in London has dropped from 58 per cent to less than 25 per cent. The balance of shareholder power has inexorably shifted to New York and Toronto.
“If there is concern about the decision in London, it won't be on patriotic grounds. Reuters had been a global company for years before the Thomson deal (although according to a history of the group, Sir Peter Job, managing director, dismissed a 1980 suggestion to relocate its HQ to Geneva as "pallid internationalism").”
The FT noted that “Paul Julius Reuter, the agency's founder, had two names (he was born Israel Beer Josaphat), two nationalities (German and English) and two religions (Jewish and Christian), so you wouldn't bet against Thomson Reuters adding another listing in future (Shanghai, perhaps). But, barring takeover or break-up, London is, regrettably, unlikely to be one of them.”
● SOURCE Financial Times
Sir Peter Job tests patience of angry investors
Wednesday 03 June 2009
Sir Peter Job, former Reuters CEO and now “City grandee”, should resign promptly as chairman of oil giant Shell’s remuneration committee, The Guardian said on Wednesday.
He should know the drill, the newspaper said. When the majority of voting shareholders in a major FTSE 100 company give a thumbs-down to the report on directors' remuneration, vague words from the non-executives about "reflecting carefully" only buy a little time. After a while, action is expected, which usually means a resignation.
“A fortnight after Shell's defeat, it's worth asking: what is Job waiting for? If he's hoping that shareholders' anger will abate, he will be disappointed. Fund managers remember how he referred to the bonus issue as ‘an irritant’ and they are determined to be irritating.
“More likely, Job fails to appreciate why investors are angry. Let's spell it out: Shell paid £3.6m in bonuses to directors even though performance targets were missed – the firm finished fourth, rather than third or better, in a league table of big oil companies ranked by shareholder returns.
“Yes, the small print allowed the remuneration committee to use discretion but the 60% vote against its report shows that shareholders think the right was abused.
“Job plans meetings with shareholders in autumn, suggesting he thinks he can survive that long. Maybe he can but humiliation looks inevitable if he's still clinging on at next year's annual meeting. A prompt resignation would surely be more dignified.”
● SOURCE The Guardian
He should know the drill, the newspaper said. When the majority of voting shareholders in a major FTSE 100 company give a thumbs-down to the report on directors' remuneration, vague words from the non-executives about "reflecting carefully" only buy a little time. After a while, action is expected, which usually means a resignation.
“A fortnight after Shell's defeat, it's worth asking: what is Job waiting for? If he's hoping that shareholders' anger will abate, he will be disappointed. Fund managers remember how he referred to the bonus issue as ‘an irritant’ and they are determined to be irritating.
“More likely, Job fails to appreciate why investors are angry. Let's spell it out: Shell paid £3.6m in bonuses to directors even though performance targets were missed – the firm finished fourth, rather than third or better, in a league table of big oil companies ranked by shareholder returns.
“Yes, the small print allowed the remuneration committee to use discretion but the 60% vote against its report shows that shareholders think the right was abused.
“Job plans meetings with shareholders in autumn, suggesting he thinks he can survive that long. Maybe he can but humiliation looks inevitable if he's still clinging on at next year's annual meeting. A prompt resignation would surely be more dignified.”
● SOURCE The Guardian
Sir Peter Job under fire over executive pay at Shell
Sunday 24 May 2009
Sir Peter Job, former Reuters CEO, is under fire for his handling of a controversial executive pay decision he made as a non-executive director at oil group Royal Dutch Shell.
Angry investors are calling for his head, The Sunday Times reported. Shareholders think the removal of Job should be the first step in the shake-up of a boardroom criticised as being out of touch.
The changes are being demanded after a decision to pay £3.65 million in bonuses to executives despite missing performance targets. As head of the remuneration committee, Job waved the payments through, the newspaper said.
“He should go,” it quoted a top institutional investor as saying. “He’s been there too long. He’s clearly not in tune with the mood of investors.”
US fund Franklin Mutual called Job's bonus decision “pathetic”.
“Many shareholders were already upset after Job sent a letter to investors before the vote to explain the committee’s position. One investor described the letter, seen by The Sunday Times, as ‘tone-deaf’. In it Job referred to the pay row as ‘an irritant’ and argued that the company had ‘already gone a long way towards meeting shareholder concerns’.
“The investor said: ‘It was the tone of it. It gave the impression that they are living in a world of their own.’”
Job has been a non-executive director at Shell since 2001. He has chaired the remuneration committee since 2007.
The bonus plan was based on Shell’s three-year share performance relative to a group of rival firms. It finished fourth, meaning executives were entitled to nothing. Because the difference between the next closest rival, France’s Total, was considered marginal – less than two per cent – Job waved through payments equal to 50 per cent of base salary. It was the second consecutive year he had approved pay-outs despite Shell’s underperformance.
The decision enraged investors – nearly 60 per cent voted down the remuneration report – but the vote is not binding. Shell and Job declined to comment.
The Sunday Times’ sister paper The Times said on Saturday that Job should have seen it coming. “...the former Reuters journalist and much-travelled non-executive, has been through a couple of bruising battles before over allegations of overly generous executive pay.
“But Sir Peter blundered into the minefield again as chairman of the remuneration committee at Royal Dutch Shell, which decided that performance targets previously set should be ignored and that some of the money should be paid regardless.”
The Times noted that Job had been involved in similar controversies when he was a non-executive director of GlaxoSmithKline and Schroders.
“Sir Peter, who turns 68 in July, is an improbable facilitator for fat cats, being a workaday journalist made good. He grew up in Devon and joined Reuters' graduate trainee programme.
“This is regarded as one of the key launches for a glittering career in journalism and, after joining in 1969, Sir Peter became a correspondent in Paris, New Delhi, Kuala Lumpur, Jakarta and, as manager, Buenos Aires before taking over the Asian operation in 1978.
“Described variously by some former colleagues as ‘prickly’ and ‘intellectually self-assured’, he became chief executive in 1991. He is the last journalist to run the news operation founded by Paul Julius Reuter in 1851.
“Under Sir Peter, Reuters widened its range of products for financial markets but was criticised for being slow to use the internet by comparison with rivals. Sir Peter was wrong-footed in 1999 when remarks he made were taken to mean that the company had no online strategy whatsoever – he later admitted he had given journalists a ‘dilatory answer’ – and the share price plunged.
“‘The internet was purpose-built for it [Reuters],’ said a former colleague yesterday. ‘He let Reuters not engage – he let Bloomberg dominate.’”
The Times summed up Job’s “Ups and downs” as follows:
Background: Studied languages at Exeter College, Oxford; Reuters trainee, then a number of foreign postings
Best break: Becoming chief executive, 1991
Worst break: Apparent fumble over Reuters' internet strategy, which sent the share price into a tailspin
Style: Self-assured, prickly, aloof.
● SOURCE The Sunday Times | The Times
Angry investors are calling for his head, The Sunday Times reported. Shareholders think the removal of Job should be the first step in the shake-up of a boardroom criticised as being out of touch.
The changes are being demanded after a decision to pay £3.65 million in bonuses to executives despite missing performance targets. As head of the remuneration committee, Job waved the payments through, the newspaper said.
“He should go,” it quoted a top institutional investor as saying. “He’s been there too long. He’s clearly not in tune with the mood of investors.”
US fund Franklin Mutual called Job's bonus decision “pathetic”.
“Many shareholders were already upset after Job sent a letter to investors before the vote to explain the committee’s position. One investor described the letter, seen by The Sunday Times, as ‘tone-deaf’. In it Job referred to the pay row as ‘an irritant’ and argued that the company had ‘already gone a long way towards meeting shareholder concerns’.
“The investor said: ‘It was the tone of it. It gave the impression that they are living in a world of their own.’”
Job has been a non-executive director at Shell since 2001. He has chaired the remuneration committee since 2007.
The bonus plan was based on Shell’s three-year share performance relative to a group of rival firms. It finished fourth, meaning executives were entitled to nothing. Because the difference between the next closest rival, France’s Total, was considered marginal – less than two per cent – Job waved through payments equal to 50 per cent of base salary. It was the second consecutive year he had approved pay-outs despite Shell’s underperformance.
The decision enraged investors – nearly 60 per cent voted down the remuneration report – but the vote is not binding. Shell and Job declined to comment.
The Sunday Times’ sister paper The Times said on Saturday that Job should have seen it coming. “...the former Reuters journalist and much-travelled non-executive, has been through a couple of bruising battles before over allegations of overly generous executive pay.
“But Sir Peter blundered into the minefield again as chairman of the remuneration committee at Royal Dutch Shell, which decided that performance targets previously set should be ignored and that some of the money should be paid regardless.”
The Times noted that Job had been involved in similar controversies when he was a non-executive director of GlaxoSmithKline and Schroders.
“Sir Peter, who turns 68 in July, is an improbable facilitator for fat cats, being a workaday journalist made good. He grew up in Devon and joined Reuters' graduate trainee programme.
“This is regarded as one of the key launches for a glittering career in journalism and, after joining in 1969, Sir Peter became a correspondent in Paris, New Delhi, Kuala Lumpur, Jakarta and, as manager, Buenos Aires before taking over the Asian operation in 1978.
“Described variously by some former colleagues as ‘prickly’ and ‘intellectually self-assured’, he became chief executive in 1991. He is the last journalist to run the news operation founded by Paul Julius Reuter in 1851.
“Under Sir Peter, Reuters widened its range of products for financial markets but was criticised for being slow to use the internet by comparison with rivals. Sir Peter was wrong-footed in 1999 when remarks he made were taken to mean that the company had no online strategy whatsoever – he later admitted he had given journalists a ‘dilatory answer’ – and the share price plunged.
“‘The internet was purpose-built for it [Reuters],’ said a former colleague yesterday. ‘He let Reuters not engage – he let Bloomberg dominate.’”
The Times summed up Job’s “Ups and downs” as follows:
Background: Studied languages at Exeter College, Oxford; Reuters trainee, then a number of foreign postings
Best break: Becoming chief executive, 1991
Worst break: Apparent fumble over Reuters' internet strategy, which sent the share price into a tailspin
Style: Self-assured, prickly, aloof.
● SOURCE The Sunday Times | The Times
Downturn is Tom Glocer’s ‘first real test’
Sunday 29 June 2008
Tom Glocer faces his first real test as CEO of Thomson Reuters in the downturn in investment banking, The Sunday Times said.
The downturn is undoubtedly coming – but it doesn’t have to be as bad as last time round, the UK newspaper said.
“That, at least, is the mantra from the newly minted Thomson Reuters,” it said.
“After boarding a plane back to his native New York, from where he will run the company, Tom Glocer now faces his first real test. Thomson still believes it can grow revenues at its financial-markets division during 2009, although most analysts are much less bullish.
“Of course, the new Thomson was created by Glocer so that such a challenge wouldn’t matter as much as it used to. After six years at the helm of Reuters, getting it shipshape after Peter Job’s regime, he concluded that the best place for a company exposed to such a volatile sector as global finance was within another one. His verdict sounded eminently sensible.”
As part of Thomson, markets – which contains the old Reuters business – account for roughly 60 per cent of revenues and 40 per cent of operating profits. Smoothing it out is the more profitable legal, accounting and science information arm.
Thomson has some enviable assets with great defensive qualities. However, it is hard to divert attention from its financial-sector exposure, particularly as most of the £375 million merger cost savings will be squeezed from that division, The Sunday Times said.
“In this gloomy light, it looks as if Glocer has created a cyclical publisher, not a more resilient financial-markets supplier. It is no coincidence that Thomson’s closest rival in professional publishing, Reed Elsevier, is attempting to offload its business publishing arm – the last division keenly exposed to the economic cycle. In these markets, even that auction is unlikely to be hurried.
“Inroads on China and India leave Glocer thinking he is better placed than during the last downturn. In 2002 and 2003, when Reuters’ recurring revenues dropped by 4% and 10% respectively, foreign exchange and commodities were under pressure. This time it is the narrower markets of fixed income and credit that are under the cosh.”
However, the newspaper said it is impossible not to see the impact of the crunch spreading into other departments. Worst-case forecasts suggest 80,000 financial jobs could go globally in the next 18 months. Broker Collins Stewart believes that, despite a push for company-wide enterprise supply deals, 20 per cent of Thomson’s group revenues come from traders’ terminal sales in the United States and western Europe, which are vulnerable when jobs are being cut.
The Sunday Times added that Thomson Reuters shares in London have tumbled 16 per cent since their debut in April, opening up a valuation gap with the more expensive and less liquid stock trading in Toronto.
“A £250m share-buyback programme has been holding them back from greater falls here, but that is due to finish this week, suggesting they will drift further, even though Thomson is forecasting a healthy 6%-8% topline growth across the group this year.”
● SOURCE The Sunday Times
The downturn is undoubtedly coming – but it doesn’t have to be as bad as last time round, the UK newspaper said.
“That, at least, is the mantra from the newly minted Thomson Reuters,” it said.
“After boarding a plane back to his native New York, from where he will run the company, Tom Glocer now faces his first real test. Thomson still believes it can grow revenues at its financial-markets division during 2009, although most analysts are much less bullish.
“Of course, the new Thomson was created by Glocer so that such a challenge wouldn’t matter as much as it used to. After six years at the helm of Reuters, getting it shipshape after Peter Job’s regime, he concluded that the best place for a company exposed to such a volatile sector as global finance was within another one. His verdict sounded eminently sensible.”
As part of Thomson, markets – which contains the old Reuters business – account for roughly 60 per cent of revenues and 40 per cent of operating profits. Smoothing it out is the more profitable legal, accounting and science information arm.
Thomson has some enviable assets with great defensive qualities. However, it is hard to divert attention from its financial-sector exposure, particularly as most of the £375 million merger cost savings will be squeezed from that division, The Sunday Times said.
“In this gloomy light, it looks as if Glocer has created a cyclical publisher, not a more resilient financial-markets supplier. It is no coincidence that Thomson’s closest rival in professional publishing, Reed Elsevier, is attempting to offload its business publishing arm – the last division keenly exposed to the economic cycle. In these markets, even that auction is unlikely to be hurried.
“Inroads on China and India leave Glocer thinking he is better placed than during the last downturn. In 2002 and 2003, when Reuters’ recurring revenues dropped by 4% and 10% respectively, foreign exchange and commodities were under pressure. This time it is the narrower markets of fixed income and credit that are under the cosh.”
However, the newspaper said it is impossible not to see the impact of the crunch spreading into other departments. Worst-case forecasts suggest 80,000 financial jobs could go globally in the next 18 months. Broker Collins Stewart believes that, despite a push for company-wide enterprise supply deals, 20 per cent of Thomson’s group revenues come from traders’ terminal sales in the United States and western Europe, which are vulnerable when jobs are being cut.
The Sunday Times added that Thomson Reuters shares in London have tumbled 16 per cent since their debut in April, opening up a valuation gap with the more expensive and less liquid stock trading in Toronto.
“A £250m share-buyback programme has been holding them back from greater falls here, but that is due to finish this week, suggesting they will drift further, even though Thomson is forecasting a healthy 6%-8% topline growth across the group this year.”
● SOURCE The Sunday Times
