Crunch slows but doesn't stop Thomson juggernaut

Demand for financial information has rescued the revenues of the newly merged Thomson Reuters despite slower overall growth, the information giant’s chief executive has revealed.

In the first earnings report since Thomson took over Reuters in April, the Anglo-Canadian group reported lower pro forma revenue growth in its second quarter of 11% as the credit squeeze hit investment banks, which are big information consumers.

Chief executive Tom Glocer said demand from corporate customers had offset weaknesses in investment banking, showing the resilience of the company’s professional and markets division.

“In markets, we are benefiting from leading positions in foreign exchange, commodities, energy, corporate and emerging markets, which have more than offset weakness among our global investment banking clients, while our enterprise solutions are seeing strong sales as these large institutions re-engineer their trading operations,” Glocer said.

Revenues for the professional division grew 10% to $1.4bn, while operating profit was $412m, a 10% rise on the same period the previous year.

Organic revenue growth in the professional division, which includes legal, tax, accounting, scientific and healthcare businesses, rose by 6%.

The markets division grew 12% to $2.1bn, reporting pro forma operating profit of $372m, 30% higher than 12 months before. Organic growth was 7%, disappointing analysts who had been hoping for 8%.

Glocer added: “We are encouraged by the robust revenue growth, which we achieved despite the backdrop of a challenging economic environment.”

Observers said that even if revenue dipped further, the $1.2bn savings generated by the merger of the two companies could underpin growth.

Thomson Corp of Canada bought London-based Reuters Group in April this year for about $16bn in cash and stock, with the aim of expanding its market beyond North America. The deal reduced Reuters’ exposure to financial markets.

“We have made excellent progress on our integration plan, including the realisation of cost synergies, the streamlining of our product offerings in the markets division, the pursuit of revenue synergies across both divisions and the achievement of our goal of becoming one company in one year,” said Glocer.

The chief executive remained upbeat about the group achieving its full-year targets, despite the recession in the US and the possibility of one across the EU.

Indeed, some observers suggested that the credit squeeze could increase demand for information from certain sectors, in particular the legal sector, where securities-related lawsuits in the US in the first half of this year have nearly doubled in the last year.

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