NEW YORK (Reuters) - News and information company Thomson Reuters Corp (N:TRI) (TO:TRI) reported higher-than-expected quarterly profit on Thursday but missed expectations on revenue and its stock opened down more than 2 percent.
A key barometer of future demand in Thomson Reuters' largest business, Financial & Risk, showed its first decline in years.
Total company revenue of $2.86 billion (2 billion pound) was slightly below Wall Street estimates of $2.89 billion. Sales rose 1 percent to $1.5 billion in Financial & Risk, which provides news and analytics to banking, investment and other professional clients and accounts for half of total company revenue.
The division showed cancellations outpacing sales for the first time in 11 quarters, an indicator of future demand. These 'net sales' were up for the third full year in a row, however.
"The big European banks, and to a lesser extent Russia and Brazil, impacted our financial business disproportionately this quarter," Chief Executive Jim Smith said in an interview, adding the company is well-positioned to help clients in an uncertain regulatory and economic environment.
The F&R unit did not see a big swing in demand, Smith told analysts on a conference call.
"In this low-growth environment, in any given quarter, one or two contracts can determine if we're above-the-line positive or below-the-line negative," he said. "There wasn't some dramatic shift."
PROFIT TOPS ESTIMATES
Net earnings were $2.24 billion, or $3.03 per share, compared with $417 million, or 53 cents a share, in the year-ago quarter.
Excluding charges and earnings from discontinued operations, the company earned 60 cents per share, 2 cents above analysts' average forecast, according to Thomson Reuters I/B/E/S.
In October, the company closed its sale of its Intellectual Property & Science business for $3.55 billion, helping the quarter's bottom line.
Thomson Reuters, parent of Reuters News, competes for financial customers with Bloomberg LP and News Corp's (O:NWSA) Dow Jones unit. The Reuters News unit's sales rose 5 percent in the fourth quarter to $77 million.
Revenues at the Legal division were flat at $864 million; Tax & Accounting revenue increased 2 percent to $416 million.
Adjusted earnings and profit margins were slightly below expectations in F&R and Tax & Accounting, according to RBC Capital Markets. However, that was partly offset by lower corporate and other costs, RBC analysts said in a note to clients.
Earlier this week, the company acquired Clarient Global LLC, a platform for client and customer data, and Avox Limited, a UK-based leading supplier of legal entity data. Terms were not disclosed.
Smith said the company was open to making strategic, 'tuck-in' deals but overall M&A was not going to be a large aspect of its strategy going forward.
Thomson Reuters' board approved a 2-cent increase to its annual dividend, to $1.38 per share, and would boost its stock buyback by $1 billion.
The company said it aimed to accelerate revenue growth in 2017, forecasting a low-single digit sales increase, before currency impact. It estimated 2017 adjusted earnings per share of $2.35, in line with current Wall Street estimates.
Thomson Reuters shares were down 3.2 percent at $43.23 in early New York trading, and by a similar amount on the Toronto Stock Exchange.
