Earnings: Thomson Reuters Revs Up 12 Percent; Reuters Revs Up 13 Percent

For its first quarter after the merger, Thomson (NYSE: TOC) Reuters (NSDQ: RTRSY) reported Q1 revenue of $3.3 billion a 12 percent year-over-year increase. Net income declined to $192 million ($.30 per share) from $223 million ($.35 per share), although the quarter was affected by various one-time costs. On a pro-forma basis, so making several adjustments to the numbers, the company said that operating profit grew 37 percent to $579 million. Looking at each separately, Thomson revenue grew 10 percent to $1.8 billion, while Reuters grew 13 percent to $1.4 billion key highlights:

— The markets division, consisting of various offerings to the financial industry, grew revenue by 11 percent. Within that unit, media revenue was up 12 percent to $91 million.
— The company expects that the merger will produce $1 billion in cost savings for 2010, which is ahead of schedule, and that it will save another $1.2 billion in 2011 from the deal.
— For the year, it expects 6 to 8 percent revenue growth.

Release | Webcast (10:00 AM ET) | Slides

Conference call: There was lots of concern among analysts about how the company would fare in light of weakening economic conditions. So far, the company claims it’s not getting hurt much. Said CEO Tom Glocer: “Thomson Reuters is not immune to the business cycle… but I think the fear around the financial services business has been overstated, in part because we’re well positioned.” Various advantages for the company include its lack of exposure to the consumer, the diversity of its customer base — no customer accounts for more than 2 percent of revenue.

Glocer started the call by going through a well-practiced explanation of what the new company had in mind strategically, how it would benefit via scale economics, a global reach, and the opportunity to integrate horizontally in key areas. By that, they mean, certain technology platforms can be extended into multiple areas, to achieve top-line and margin growth: “(though horizontal initiatives) we can drive 1-2 points of additional growth or 1-2 points of additional margins, compared to what each of these businesses can do on a standalone basis.” But as is often the case, analysts seemed keen to get a deeper understanding of the cost savings. While strategic synergies may prove important, at this point, the company has to show some nuts and bolts stuff to demonstrate the rationale for the deal.

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