Thomson Reuters 2Q profit slides 54 percent

Thomson Reuters said second-quarter earnings fell 54 percent as costs to buy and integrate Reuters cut into profit.

Results that treat Thomson Reuters as if the acquisition happened a year ago rose sharply, on higher revenue from information services to professionals and lower operating costs.

The provider of financial news and professional information said net income fell to $173 million from $377 million a year ago. After paying preferred dividends, per-share income fell to 22 cents from 58 cents.

Revenue rose 73 percent to $3.13 billion, mostly because the result included nearly a full quarter of revenue from Reuters.

Thomson Corp. bought Reuters Group PLC for about $15.8 billion on April 17, making this the first quarter the combined company has reported results.

Thomson Reuters did not say how much it spent on integration costs. Assuming the two companies were one last year also, operating profit from continuing businesses in the second quarter was flat at $405 million. Total operating profit jumped 15 percent to $708 million and revenue rose 11 percent to $3.44 billion.

"We are encouraged by the robust revenue growth which we achieved despite the backdrop of a challenging economic environment," Chief Executive Thomas Glocer said in a statement.

The company's New York-listed shares edged lower in midday trading after it said growth in its markets division — which includes Reuters and the Thomson Financial information business — slowed in the second quarter compared with the first.

Analysts have been concerned that the troubles roiling the financial services sector will drag on the company's growth since most of the profitable data terminals it sells go to investment banks that are cutting staff. Thomson Reuters competes with privately held Bloomberg LP and News Corp.'s Dow Jones unit in this business.

The markets division delivered 30 percent higher operating profit as it cut costs by combining business functions. Revenue rose 12 percent to $2.1 billion as sales in Asia and the unit's trading and advisory business offset weakness among investment banking clients. But growth excluding acquisitions and currency effects slowed to 7 percent from 9 percent in the prior quarter, Glocer said.

The executive said the financial services markets are "likely to remain challenging," but the company reiterated its full-year target for revenue growth of 6 percent to 8 percent.

Thomson Reuters's professional division, which includes information services and databases to the legal, tax and health care professions, had 10 percent higher revenue and 10 percent higher operating profit.

Glocer said the integration of Reuters with Thomson was ahead of plan, and will be complete within one year of the acquisition. He said the company already cut costs by $490 million and would hit $1 billion in savings by 2010.

Thomson Reuters completed a $500 million share buyback plan in July, nearly three months after it started. Glocer said the company may repurchase shares in the future, but did not announce any target for doing so.

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