Thomson Reuters Corp reported better-than-expected operating margins and reassured investors that it was coming to grips with its problems after last week's management shakeout.

While the second-quarter results on Thursday showed tepid growth in the Markets division, which serves financial institutions, that was offset by the performance of the Professional unit, which sells products to the legal, tax & accounting and scientific sectors.

Shares of Thomson Reuters rose about 3.7 percent in morning trading, recovering some of the losses since the company announced a reorganization that included the departure of Markets division chief Devin Wenig.

Chief Executive Thomas Glocer has now taken direct responsibility for the turnaround of Markets and is preparing a plan to boost revenue growth.

He will have about a year to make it work, according to people familiar with the thinking of the board and controlling shareholder, Canada's Thomson family.

I am confident we can tune up the performance engine in Markets on a relative basis to perform more strongly than it has been, Glocer said in an interview.

But he added, I have to be realistic there is a wave of cost cutting going across the financial services industries and that means ... we are going to have a much faster ship-shape vessel heading into a stiffer headwind.

The company said its underlying operating profit margin rose to 20.9 percent in the second quarter, from 19.5 percent a year ago. Much of the gain was driven by follow-through cost-savings from Thomson Corp's acquisition of Reuters Group Plc in 2008, as well as beneficial currency movements.

The impact on margins is the good news and I think that is what is driving more positive sentiment, and the relief there is no bad news to follow the management changes to last week, said Claudio Aspesi, analyst at Sanford Bernstein.

Overall revenue and profit were within the ranges Thomson Reuters provided last week, when it announced the departure of Wenig and five other senior Markets executives.


The moves came as Thomson Reuters struggles to persuade traders and bankers to adopt a new flagship desktop, Eikon, which knits together dozens of disparate legacy products.

On a conference call with analysts, Glocer spent much of his time answering questions about his plan to turn around the Markets division, which competes with Bloomberg LP, News Corp's Dow Jones and FactSet Research.

He was asked about the slow rollout of Eikon, if there were installation issues, and whether the problem was with the product or with the salesforce.

Eikon incorporates social media-like functions, and was designed to be more cost-effective and easier to install.

Glocer defended Eikon, saying that clients who had the platform liked it. He pointed the finger at a sales reorganization last year, calling it disruptive. We didn't put our best foot forward in terms of service, he said.

Thomson Reuters has sold more than 28,000 Eikon desktops since its launch last September, of which about 3,500 are to new users. Roughly 15 percent of high-end users of legacy products have been migrated to Eikon, the company said.

Thomson Reuters gets much of its revenue from long-term subscriptions, which means any pickup in Eikon sales won't significantly boost financial results till next year.

Glocer affirmed the company's 2011 outlook and declined to give a forecast on 2012 sales. He said in the interview that one of the reasons he acted urgently was so the company could enter next year with decent momentum.

The Markets division, which accounts for about 59 percent of overall revenue, reported 1 percent growth in revenue after backing out the impact of exchange rate movements. That was weaker than the first quarter's 2 percent rise, and far short of the Professional unit's 8 percent adjusted revenue growth.

It is clearly disappointing and clearly a reflection of the market environment in which they operate, Paul Sullivan, an analyst at Barclays Capital in London, said of the Markets division. It's also clear the take-up in new products is somewhat slower than probably the company and the market has envisioned.

The company's Professional division counts on legal products for 69 percent of operating profit. Its WestLaw legal database has been gaining market share in the United States against Reed Elsevier's Lexis Nexis.

Thomson Reuters' total revenue, excluding divestitures, was $3.20 billion, up 4 percent before currency adjustments. Adjusted earnings per share rose to 51 cents from 41 cents.

The average analyst forecast was for revenue of $3.16 billion and earnings per share of 49 cents, according to Thomson Reuters I/B/E/S.

Thomson Reuters reaffirmed its outlook, saying it expected revenue to grow in the mid-single digits in 2011.

The company's stock, which rose as much as 4 percent, was up about 3.7 percent at $34.88 in New York trading and C$33.10 in Toronto.

(Additional reporting by Robert MacMillan; Editing by Tiffany Wu and Ted Kerr)