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 Chief Executive Officer Jim Smith said headwinds at the end of last
year were stronger than anticipated, and he saw financial markets
remaining "challenged" for some time to come as the global banking
system restructures.
The global news and information company forecast that 2014 revenue
would be flat, compared with a 2 percent increase to $12.5 billion
in 2013, excluding divestitures and currency changes.
"It's still a volatile time everywhere," Smith said in an interview.
"We did see more weakness in Europe and in Asia than we expected in
the fourth quarter."
Thomson Reuters said fourth-quarter underlying operating profit
dropped 50 percent from a year ago, partly due to previously
announced charges related to job cuts and other restructuring
expenses. Excluding the charges, operating profit fell 5 percent to
$577 million in the fourth quarter.
It reported adjusted fourth-quarter earnings of 49 cents per share,
below the average analyst estimate of 52 cents, according to Thomson
Reuters I/B/E/S. Revenue rose 1 percent to $3.265 billion, roughly
in line with expectations.
About one-half of revenues come from banks and other financial
institutions, and about one-quarter from the legal profession. Both
sectors have lowered spending, trimmed costs and consolidated. For
instance, Britain's third-biggest bank, Barclays Plc <BARC.L>, said
on Tuesday it would slash 12,000 jobs this year.
"Ultimately it's still a tough environment," said Claudio Aspesi, an
analyst with Bernstein & Co. "The scrutiny of costs is high and
spending levels are subdued," he said about Thomson Reuters'
customer base.
Revenue in the Financial & Risk division, which caters to banks,
retail brokers and other types of firms, fell 2 percent to $1.6
billion as product cancellations outpaced new sales.
Smith declined to comment on new sales in the current quarter, but
said he was pleased with the way the year had begun and expected
"gradually improving net sales to continue."
Thomson Reuters said its flagship product for financial
institutions, Eikon, was installed on 123,000 desktops as of January
31, 2014, compared with 96,000 at September 30, 2013.
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By region, Financial & Risk revenue fell 3 percent in Europe, Middle
East and Africa, was off 3 percent in the Americas, and rose 2
percent in Asia.
Revenue at the legal division, known for its Westlaw legal database,
was up 2 percent to $868 million, mainly due to acquisitions.
Organic revenue, excluding acquisitions, fell 2 percent, largely due
to weakness in Latin America and a drop in U.S. print revenue as law
firms spent less on print case law books.
Smith said Thomson Reuters, which employs about 60,000 people
globally, is cutting costs and pushing for innovation in an effort
to transform its business. During the fourth quarter, it cut 3,000
positions.
The company reported a net loss of $343 million in the quarter,
including a restructuring charge of $275 million. That compared with
a net profit of $368 million a year earlier. It said it expects to
take another $120 million in charges in 2014.
Thomson Reuters shares fell 5.2 percent to $34.71 in early trading
in New York.
"While the external headwinds were stronger than anticipated at
year-end, particularly in Europe and the emerging markets, I am
pleased with the progress we continued to make inside the company
and with our customers," Smith said.
(Editing by Tiffany Wu and Jeffrey
Benkoe)
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