Thomson Reuters Corp reported a better-than-expected quarterly profit on Thursday, helped by cost cuts, and said it expected 2009 revenue to grow as the financial industry recovers.
The news and financial data publisher stuck to its forecast that revenue would grow in 2009 and that its profit margin would be similar to last year's as markets stabilize.
Quite a few banks are saying, 'Oh, we cut too deeply and we're finding business is so good, we need to hire people to handle the volume,' CEO Tom Glocer said in an interview.
I couldn't imagine six months ago that people would be talking about guaranteed bonuses over multiple years to hire people, he said.
Nevertheless, the fallout from the financial crisis will likely squeeze the Markets division, Glocer said.
It's only logical to assume that in the second half of the year, the (division's) reported revenue growth will go below the zero line rather than above it, he said.
Overall second-quarter underlying operating profit rose 11 percent to $793 million from $713 million a year earlier.
Earnings per share rose to 58 cents from 39 cents, beating analysts' expectations of 43 cents per share, according to Reuters Estimates.
Revenue from ongoing businesses, excluding the impact of foreign exchange rates, rose 2 percent to $3.28 billion, in line with market expectations.
Markets division revenue, excluding currency adjustments, was flat in the second quarter at $1.9 billion.
Revenue in the Professional division, which includes products for lawyers, accountants and healthcare professionals, rose 4 percent, before currency adjustments, to $1.4 billion.
The company attributed its underlying operating profit growth to cost controls, currency benefits and savings from Thomson Corp's purchase of Reuters Group Plc last year.
The company expects to get $1 billion of annual savings by the end of 2009, it said.
The target is $1.4 billion in annual savings by 2011.
Corporate expenses in quarter fell by $20 million to $255 million.
Thomson Reuters shares were up about 5 percent in London and more than 2 percent in Toronto and New York.
Shareholders will vote Friday on a proposal to delist the company's shares from the London exchange. The shares will continue to trade in New York and Toronto.
(Reporting by Robert MacMillan in New York and Georgina Prodhan in London; editing by Ted Kerr)