In this news, we discuss the Thomson Reuters revenue rise, cash flow outlook lift shares.
(Reuters) – Thomson Reuters Corp TRI.TOTRI.N said third quarter revenue increased thanks to gains in its legal and corporate divisions and cost cuts helped improve its cash flow outlook available for 2020, causing its shares to rise nearly 4% on Tuesday.
The news and information company said the results had given it “growing confidence” in its financial forecast for the full year, although the course of the COVID-19 pandemic may change that.
Thomson Reuters, owner of Reuters News, said in a statement that its revenue rose 2% to $ 1.44 billion in the third quarter, while operating profit rose 21% to $ 318 million of dollars.
“I am very pleased to report that our markets and business continue to be resilient in the face of a larger and more challenging macro environment,” said Managing Director Steve Hasker.
The company said its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 42% in the third quarter due to higher revenue and a cost reduction program linked to the pandemic.
Executives said on an analyst call that Thomson Reuters exceeded its cost reduction target of around $ 30 million to a total of around $ 130 million, and that the company plans to reinvest in its main activities during the fourth quarter.
Matt Arnold, analyst at Edward Jones, said in a research note that this was a “strong quarter” for Thomson Reuters, which demonstrated the “resilience of its subscription-based model”.
CFO Michael Eastwood said in an interview that Thomson Reuters is still evaluating acquisition targets and may announce a deal this year or early 2021.
The company has about $ 700 million to spend under a $ 2 billion budget to fund the expansion of its legal, tax and accounting businesses.
Thomson Reuters ‘adjusted earnings of 39 cents a share was higher than analysts’ expected 38 cents, according to IBES data from Refinitiv, while the company’s quarterly revenue was also slightly above Wall Street expectations.
The Legal, Tax and Accounting Professionals, and Corporate divisions all reported higher organic quarterly sales and adjusted profit.
Thomson Reuters said its results were boosted by strong sales from Practical Law, Westlaw Edge and its European and Canadian companies and by increased revenue for the tax division after an extension of the deadline for filing tax returns to United States from April to July.
Reuters News division’s organic revenue fell 2%, reflecting a decline in agency activity and the continuing impact of the coronavirus crisis on its events business.
Thomson Reuters reaffirmed its full-year forecast of revenue up 1% to 2% and raised its free cash flow forecast to around $ 1.1 billion, in the upper part of the previous outlook.
The company also confirmed that the LSE.L purchase by the London Stock Exchange of the data and analytics business Refinitiv is expected to close in the first quarter of 2021, when it also expects to incur a tax burden of ‘About $ 600 million.
Thomson Reuters executives said the company could fund the payment through free cash flow, its $ 1.2 billion free cash flow, or by using credit facilities.
The sale of Thomson Reuters’ 45% stake in Refinitiv will allow it to own 15% of LSE, estimated at some $ 9 billion, which it plans to sell within five years and use the proceeds to reinvest in its main activities.
Reporting by Kenneth Li; Edited by Alexander Smith
Original © Thomson Reuters