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Thomson Reuters CEO James Smith: 'We have turned the ship'

Thomson Reuters is off to a solid start, chief executive James Smith said in a statement accompanying the group's first quarter results that showed performance consistent with full-year expectations.

“Overall, I am pleased with the trajectory of the business,” he said. “We continue to make progress, building out a scalable platform for sustainable growth.”

Earnings were higher than expected, bolstered by cost-cutting, as revenue edged higher mainly because of acquisitions. Earnings per share for the first quarter were 46 cents, excluding amortization and other items. That was ahead of a 38-cent forecast by analysts.

Interviewed by Reuters, Smith (photo) said: "We are going in the right direction, and we expect to see continued steady improvement. We have turned the ship, but there is still a lot of work to do."

The majority of Thomson Reuters' revenue comes from financial institutions and law firms, two challenged sectors that have been trimming costs and slashing headcount in recent years.

Smith said 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 first quarter.

Revenue in the Financial & Risk division decreased one per cent to $1.6 billion. The division, which accounts for more than half of total group revenue, sells its flagship desktop product, Eikon, to bankers, retail brokers and other financial professionals.

The company said revenue growth of two per cent to $803 million in the legal division was lifted by acquisitions last year.

Revenue in the Tax & Accounting division increased 13 per cent to $348 million.

Overall revenue from ongoing businesses increased one per cent 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 for the first quarter was $292 million, compared with a loss of $17 million a year earlier.

Thomson Reuters affirmed its full-year outlook and expects revenue to be unchanged from last year’s $12.5 billion.

In a message to staff, Smith listed achievements during the first quarter, including the fourth version of Eikon and a statement of new purpose and values. He added: “Although it was announced shortly after the quarter closed, a major highpoint for our organization was the Pulitzer Prize for International Reporting being awarded to Reuters colleagues Jason Szep and Andrew R. C. Marshall. As I said on the day, the award speaks not only to the dedication of our journalists around the world, but also serves as a reminded of the level of professionalism we strive to deliver in everything we do across the organization.”

He added: “The first quarter is always a busy travel period for me and this year has been no exception. I must say that my visits with customers and colleagues around the world have buoyed my spirits. I have never been more encouraged about our future. Customers are trusting us more than ever and our relationships are getting deeper. We are making tangible progress simplifying our company and building a more collaborative and open culture.

“Our transformation program is beginning to drive real change. This isn’t just about taking out costs for temporary benefit. Transformation is about building a scalable platform for sustainable future growth. It’s about breaking down internal barriers to innovation. It’s about allowing us to deliver the power of our entire enterprise to our customers. This will require further heavy lifting over the next couple of years. But it will position our company - and all of us - to grow and thrive in years to come.”

Transcript of teleconference with analysts ■