Tuesday Thomson Reuters announced a complete turnaround. For the first time since 2011 the company’s financial business is in the black, with positive net sales. Thomson Reuters also announced 3,000 job cuts aimed at “streamlining the global news and information company.”
Ultimately, the company noted that new sales outnumbered cancellations in their Financial & Risk division, which serves banks and financial institutions. Each subscription gained that is aggregated as total net sales, will help the company forecast future revenue, as sales on subscriptions are annualized.
Jim Smith, Thomson Reuters’ Chief Executive Officer commented, “The era of portfolio churning has come to an end.” According to Reuters.com, Thomson Reuters’ shares were at $36.5 in early trading, an increase of 2.1 percent.
The announcement to eliminate 3,000 positions in the Financial & Risk segments was a part of a cost-saving plan of $350 million dollars. Earlier this year, the company went on with a $100 million dollar cost saving plan where 1000 jobs were cut. When both rounds of job cuts are considered, and jobs that were eliminated from “divestitures and attrition” are considered, Thomson Reuters’ entire workforce reduction is at 9 percent.
CEO John Smith commented, “I think everybody in the world is trying to do more with less. I don’t think the pressure on costs and keeping them under control is going to lessen. That said, what I hope is that this strategy gives us a more predictable path in the future.”
Moving forward, by the end of next year, Thomson Reuters will engage in a $1 billion dollar share repurchase plan. During this past third quarter, for $100 million dollars the company bought back almost 3 million shares. In the past year, the share price has gone up by more than 25 percent. Regarding the buyback, CEO Smith commented, “We are going to be focusing on organic growth and becoming less reliant on acquisitions.”
Getting into the details of their balance sheet, Thomson Reuters announced that its revenue rose by 2 percent to 3.07 billion due to its Tax & Accounting and legal businesses strength. The company reports a profit of 48 cents per share, ahead of the expectations of Wall Street analysts by 4 cents, and the same as last year. This number excludes “extraordinary items.” Net income fell by 37 percent to $283 million. This number includes results from business that has since been divested. Tax & Accounting revenues have gone up by 10 percent, owing their increase to a “rise in subscriptions and strong performance across all of the business segments except government.” Lastly, Thomson Reuters plans to contribute $500 million to U.S and UK pension plans this quarter.
Image Credit: Thomson Reuters