NEW YORK, N.Y., Feb 24, 2010 - (ACN Newswire) - Thomson Reuters (TSX / NYSE: TRI), the world's leading source of intelligent information for businesses and professionals, today reported results for the full year and the fourth quarter ended December 31, 2009. Despite challenging global markets, the company successfully held annual revenues for 2009, grew underlying profit margins to 21.3% and achieved strong free cash flow growth. For the year, the Professional division grew revenues 3% while Markets division revenues declined 2% due to negative net sales and a difficult prior year comparison (up 6%). The underlying operating profit margin improvement was driven by continuing progress on the integration program, strong cost management and the benefit of currency.
* Sales building momentum on the back of positive Q4 2009
* Full-year revenues and underlying operating margin comparable with 2008
* Full-year underlying free cash flow exceeds $2 billion, up 9%
* Fourth-quarter total revenues down 3% before currency; Professional division
up 1%, Markets division down 5%
* Adjusted EPS $1.85 for full-year and $0.44 for fourth quarter
* Integration savings target raised by $200 million to $1.6 billion
* Board approves $0.04 annual dividend increase to $1.16 per share
Fourth-quarter net sales on a consolidated basis were positive and the best of
the year, as an improving operating environment complemented product and service
improvements and a reallocation of resources to faster growing markets. Revenues
(before currency) declined 3%, with the Professional division up 1% and the
Markets division down 5%, as revenue flow-through from weak sales earlier in
2009 held back strong performances in Tax & Accounting, Healthcare & Science and
Markets' Enterprise. The underlying operating profit margin was 19.7% in the
fourth quarter, reflecting revenue declines and product mix.
"I am pleased with the resilient performance of the company in 2009. Despite the
worst global operating environment any of us has faced, Thomson Reuters was able
to hold or improve on our prior-year results, with revenues comparable to 2008
and underlying operating margin and free cash flow up on the prior year. I am
also pleased that our net sales performance improved significantly through the
year, with the fourth quarter recording positive net sales for the company as a
whole. We are off to a strong start in sales in 2010 with the launch of the
innovative WestlawNext in Legal, and positive net sales in Markets," said Thomas
H. Glocer, chief executive officer of Thomson Reuters.
"Given our improving sales figures, I am confident that 2009 was the bottom of
the sales cycle for us and that 2010 will see the corresponding bottom in
period-on-period reported revenues. I expect that we will return to revenue
growth in the second half of 2010."
"2010 will be another year of important investment for Thomson Reuters, with the
final year of heavy integration spending in Markets, the release of important
new product platforms, such as WestlawNext in Legal and 'Project Utah' in
Markets, targeted investments in higher growth units such as Tax & Accounting,
Enterprise and Healthcare & Science, as well as in emerging markets. While these
investments will have a short-term impact on operating margin, they are designed
to accelerate future growth and we expect operating margin to rebound in 2011,"
Mr. Glocer added.
Consolidated Financial Highlights - Full-Year Results
Twelve Months Ended December 31,
(Millions of U.S. dollars, except EPS and profit
margin)
IFRS Financial Measures 2009 2008 Change
Revenues $12,997 $11,707 11%
Operating profit $ 1,575 $1,668 -6%
Diluted earnings per share $1.01 $1.68
(EPS) -40%
Cash flow from operations $2,666 $2,761 -3%
Non-IFRS Financial Measures
(1) 2009 2008 Change Change Before Currency
Revenues from ongoing $12,948 $13,283
businesses -3% 0%
Underlying operating profit $2,754 $2,778 -1%
Underlying operating profit 21.3% 20.9%
margin +40bp
Adjusted earnings per share $1.85 $1.82
(EPS) 2%
Underlying free cash flow $2,058 $1,885 9%
(1) These and other non-IFRS financial measures are defined and reconciled
to the most directly comparable IFRS measure in the tables appended to this news
release. Additional information is provided in the explanatory note at the end
of this news release.
* Revenues from ongoing businesses were $13 billion, comparable with 2008
before currency and down 3% after currency.
* IFRS revenues increased 11% after currency and only include Reuters results
subsequent to its acquisition on April 17, 2008.
* Underlying operating profit margin increased 40 basis points to 21.3% due to
integration savings, continued commitment to strong cost management and the
benefit of currency. Underlying operating profit declined 1%, primarily
attributable to an increase in non-cash pension expense of approximately $30
million resulting from the company's conversion to IFRS in 2009.
* Adjusted earnings per share were $1.85, compared to $1.82 in 2008 and
included integration-related costs of $0.51 per share in 2009 and $0.45 in
2008 which are included in adjusted earnings but not in underlying operating
profit.
* Integration and legacy savings programs reached a run-rate savings of $1.1
billion, $300 million higher than originally estimated at the close of the
Reuters acquisition. The 2011 run-rate savings target has been raised to
$1.6 billion (up $200 million), with $1.2 billion attributable to
integration savings and the balance derived from the company's legacy
savings programs.
* Underlying free cash flow was strong for the year at $2.1 billion compared
to $1.9 billion in 2008.
Consolidated Financial Highlights - Fourth-Quarter Results
Three Months Ended December 31,
(Millions of U.S. dollars, except EPS and
profit margin)
IFRS Financial Measures 2009 2008 Change
Revenues $3,357 $3,395 -1%
Operating profit $346 $633 -45%
Diluted earnings per share
(EPS) $0.21 $0.67 -69%
Cash flow from operations $896 $1,005 -11%
Non-IFRS Financial Measures 2009 2008 Change Change Before Currency
Revenues from ongoing
businesses $3,349 $3,329 1% -3%
Underlying operating profit $661 $788 -16%
Underlying operating profit
margin 19.7% 23.7% -400bp
Adjusted earnings per share
(EPS) $0.44 $0.50 -12%
Underlying free cash flow $675 $829 -19%
* Revenues from ongoing businesses declined 3% before currency (down 1% on an
IFRS basis), with strong growth in Tax & Accounting, Markets' Enterprise,
Healthcare & Science and Legal's subscription business offset by weaker
performance in Markets' other units and in print and transaction revenues in
Legal.Fourth-quarter 2008 revenue growth of 5% provided a challenging
comparison.
* Underlying operating profit, as anticipated, declined 16% against a strong
prior year when profits grew 13%. This decline was due to flow-through from
lower revenues, product mix, ongoing investments and an increase in benefit
expenses including the impact of adopting IFRS pension accounting.
* Adjusted earnings per share were $0.44 compared to $0.50 in the prior-year
period and included integration-related costs of $0.17 per share ($0.16 in
Q408), which are included in adjusted earnings but excluded from underlying
operating profit.
Fourth-Quarter and Full-Year Business Segment Highlights
Unless otherwise noted, all revenue growth comparisons in this news release are
before the impact of foreign currency as Thomson Reuters believes this provides
the best basis to measure the performance of its business. All revenue growth
and operating profit comparisons are based upon results from ongoing businesses
and exclude the results of disposals.
Professional Division
Professional Division - Full-Year Results
Twelve Months Ended December 31,
(Millions of U.S. dollars, except profit
margin)
2009 2008 Change Change before currency
Revenues
Legal $3,586 $3,639 -1% 0%
Tax & Accounting $1,006 $926 9% 9%
Healthcare & Science $829 $784 6% 7%
Professional Division Total $5,421 $5,349 1% 3%
Operating Profit
Legal $1,155 $1,192 -3%
Tax & Accounting $214 $216 -1%
Healthcare & Science $185 $169 9%
Professional Division Total $1,554 $1,577 -1%
Operating Profit Margin %
Legal 32.2% 32.8%
Tax & Accounting 21.3% 23.3%
Healthcare & Science 22.3% 21.6%
Professional Division Total 28.7% 29.5%
Professional Division -Fourth-Quarter Results
Three Months Ended December 31,
(Millions of U.S. dollars, except profit
margin)
2009 2008 Change Change before currency
Revenues
Legal $903 $912 -1% -3%
Tax & Accounting $311 $280 11% 10%
Healthcare & Science $224 $213 5% 4%
Professional Division Total $1,438 $1,405 2% 1%
Operating Profit
Legal $268 $297 -10%
Tax & Accounting $101 $98 3%
Healthcare & Science $52 $62 -16%
Professional Division Total $421 $457 -8%
Operating Profit Margin %
Legal 29.7% 32.6%
Tax & Accounting 32.5% 35.0%
Healthcare & Science 23.2% 29.1%
Professional Division Total 29.3% 32.5%
* Full-year revenues grew 3%, led by strong growth in Tax & Accounting and
Healthcare & Science which were up a combined 8%, and Legal's recurring
subscription business.
* Full-year operating profit declined 1% and the corresponding margin
decreased 80 basis points as tight cost controls and efficiency initiatives
were offset by lower revenue growth, business mix and the dilutive effect of
acquisitions.
* Fourth-quarter revenues rose 1%, driven by growth in Tax & Accounting,
Healthcare & Science and subscription legal products, but offset by a
continued decline in print products.
* Fourth-quarter operating profit declined 8% primarily due to the same
factors that impacted full-year profitability.
Legal
* Full-year revenues were flat as strong growth from FindLaw (up 13%) and
subscription-related products (up 6%) were offset by a 5% decline in print
and a 13% decline in non-subscription products.
* Full-year operating profit declined 3% and the corresponding margin declined
60 basis points to 32.2%. Savings from efficiency initiatives and tight
cost controls were not enough to offset flow-through on flat revenues,
revenue mix and investments in growth initiatives.
* Fourth-quarter revenues declined 3% as growth from subscription-related
products (up 4%) and FindLaw (up 9%) was offset by declines of 13% in print
and 14% in non-subscription products.
* Fourth-quarter operating profit declined 10% and the associated margin was
29.7% versus 32.6% in the prior-year period. Lower revenues, particularly
from profitable print and non-subscription products, as well as the impact
of foreign exchange, more than offset efficiency savings.
Tax & Accounting
* Full-year revenues grew 9%. Double-digit growth in software and service
offerings in the Professional and Corporate software and services
businesses, coupled with continued good performance from Checkpoint (up
6%), were slightly offset by a 10% decline in print/CD revenues.
* Full-year operating profit declined 1% and the related margin declined 200
basis points to 21.3%. Good flow-through on revenues was offset by
acquisition accounting related to software amortization, a shift towards
higher growth but lower initial margin businesses and technology-related
product investments.
* Fourth-quarter revenues grew 10%. Across both the Professional and
Corporate customer segments, Tax & Accounting continued to see strong demand
with good growth from UltraTax and ONESOURCE. Checkpoint grew 8% and had a
very strong sales quarter. Nearly 50% of this segment's 2009 profits were
generated in the fourth quarter.
* Fourth-quarter operating profit grew 3% and the related margin was 32.5%.
The 250 basis point margin decline, compared to the prior-year period, was
largely driven by acquisition accounting related to software amortization, a
shift towards higher growth but lower initial margin businesses and
technology-related product investments.
Healthcare & Science
* Full-year revenues grew 7%. This strong revenue growth was led by a 17%
increase in the Payer business as well as 7% growth across the Science
businesses.
* Full-year operating profit increased 9% and the related margin grew 70 basis
points versus 2008 from flow-through on revenues and favorable foreign
currency effects.
* Fourth-quarter revenues grew 4%. Growth was driven by continued demand for
healthcare spending analytics in Payer (up 10%), supplemented by good growth
across the Science businesses.
* Fourth-quarter operating profit declined 16% versus 2008, and the
corresponding margin was 23.2%. The expected decline in operating profit
was attributable to technology costs and the timing of expenses.
Markets Division
Markets Division - Full-Year Results
Twelve Months Ended December 31,
(Millions of U.S. dollars, except profit
margin)
2009 2008 Change Change before currency
Revenues
Sales & Trading $3,550 $3,852 -8% -4%
Investment & Advisory $2,304 $2,371 -3% -2%
Enterprise $1,316 $1,295 2% 6%
Media $365 $426 -14% -8%
Markets Division Total $7,535 $7,944 -5% -2%
Operating Profit $1,453 $1,406 3%
Operating Profit Margin % 19.3% 17.7%
Markets Division - Fourth-Quarter Results
Three Months Ended December 31,
(Millions of U.S. dollars, except profit
margin)
2009 2008 Change Change before currency
Revenues
Sales & Trading $875 $893 -2% -7%
Investment & Advisory $573 $582 -2% -5%
Enterprise $371 $350 6% 1%
Media $95 $101 -6% -8%
Markets Division Total $1,914 $1,926 -1% -5%
Operating Profit $323 $365 -12%
Operating Profit Margin % 16.9% 19.0%
* Full-year revenues declined 2% reflecting negative net sales, especially in
the first half of the year, and strong prior-year period revenue growth of
6%. Recurring subscription revenues (75% of total revenues) grew 1% but were
offset by an 11% decline in transaction revenues, an 8% decline in
recoveries and 17% decline in outright revenues.
* By geography, Asia grew 2%, while Europe, Middle East and Africa (EMEA) and
the Americas declined 1% and 5%, respectively.
* By market, growth in Enterprise and Commodities & Energy was more than
offset by declines in Sales & Trading and Investment Management.
* Full-year operating profit increased 3% and the margin expanded 160 basis
points as integration savings, tight cost controls and favorable foreign
exchange more than offset revenue declines.
* Fourth-quarter revenues declined 5% against a difficult comparable in 2008
when revenues grew 4%. The revenue decline was attributable to flow-through
from weaker 2009 net sales, continued pressure on recoveries, tough
comparables for outright sales and a decline in transaction revenues.
* Fourth-quarter operating profit declined 12% with the related margin
declining 210 basis points. The margin decline was attributable to the
impact of lower revenues, offset by integration savings and the benefit of
currency.
Sales & Trading
* Full-year revenues decreased 4%. A modest decline in recurring revenues
attributable to desktop cancellations was further impacted by declines in
transactions and recoveries. By market, the Commodities & Energy and
Treasury businesses both achieved revenue growth for the year.
* Fourth-quarter revenues decreased 7%. The decline was due to continued
pressure on recoveries revenues and reductions in desktops in the Exchange
Traded Instruments and Fixed Income segments. Commodities & Energy was flat
in the quarter and Treasury declined slightly, reflecting an improving trend
in foreign currency exchange transactions, which were broadly flat versus
2008.
Investment & Advisory
* Full-year revenues declined 2%. Corporate's growth of 1% was offset by a
slight decline in Retail Wealth Management, a 3% decline in Investment
Management and a 6% decline in Investment Banking.
* Fourth-quarter revenues declined 5%. While the Investment Banking business
returned to growth in the fourth quarter, the Investment Management business
was impacted by cancellations stemming from customer closures and lower
assets under management. Retail Wealth Management was impacted by lower
recoveries as customers reduced their purchases of exchange data.
Enterprise
* Full-year revenues increased 6%. Enterprise Information, which comprises
more than half of the Enterprise segment's revenues, grew 17% and the Trade
and Risk Management business grew 3%.
* Fourth-quarter revenues increased 1%, despite an extremely challenging
prior-year comparable when revenues grew 13%. Enterprise Information grew
9% in the quarter with continued demand for pricing and reference data, and
helped offset a 10% decline in outright revenues.
Media
* Full-year revenues declined 8%. The decline was attributable to continued
pressure on the Professional Publishing and Advertising businesses. Agency
business revenues declined 5% due to further consolidation in traditional
media outlets and customer budget constraints.
* Fourth-quarter revenues declined 8% for reasons that mirror those of the
full year.
Corporate & Other
Full-year corporate costs were $929 million comprised of core corporate costs of $253 million (including an increase in non-cash pension expense of approximately $30 million resulting from the company's conversion to IFRS in 2009), fair-value currency-related adjustments (non-cash) of $170 million and integration program costs of $506 million.
Fourth-quarter corporate costs were $281 million, compared to $152 million in the prior period, and were comprised of core corporate costs of $83 million (up $49 million due to higher benefit costs, including the impact of adopting IFRS pension accounting), fair-value currency-related adjustments (non-cash) of $35 million (up $75 million) and integration program costs of $163 million (up $5 million).
Integration Programs
At year-end 2009, Thomson Reuters had achieved combined run-rate savings of $1.1 billion from the Reuters integration, as well as legacy savings programs. The higher savings were principally related to the elimination of redundant positions and the retirement of legacy products.
Given the progress the company continues to make on the integration program, the company is raising its combined run-rate savings target by $200 million to $1.6 billion by year-end 2011.
The company expects to spend an additional $275 million in one-time integration costs through the end of 2011 to achieve incremental run-rate savings of $325 million in 2010 and $200 million in 2011.
Recent Developments
WestlawNext, an entirely new version of our market-leading, online legal information service, was launched as planned on February 1, 2010. The new service, which had been over five years in the making with the participation of more than 1,000 Thomson Reuters technologists, information specialists and attorneys, provides a modern, clean user interface, natural language search and highly advanced algorithms and back-end technology to advance significantly the speed, simplicity and productivity of legal research. Third party reviews and customer uptake have been very favorable, with early sales exceeding our launch targets.
Business Outlook (Before Currency)
Based on the current environment in the markets that the company serves, Thomson Reuters expects its revenues to be flat to slightly down in 2010 due to the impact of negative net sales in 2009. The company expects net sales to strengthen throughout 2010.
The company expects its underlying operating profit margin to be comparable to 2009 before investments in the major new products and platforms launching this year. These investments are expected to have an impact of approximately 100 basis points.
The company's plan to continue its aggressive investment focus to drive growth and capture efficiencies is likely to result in 2010 underlying free cash flow being slightly down on the prior year.
The information in this section is forward-looking and should be read in conjunction with the section below entitled "Special Note Regarding Forward-Looking Statements, Material Assumptions and Material Risks".
Dividend
The board of directors approved a $0.04 per share increase in the annual dividend to $1.16 per share. The quarterly dividend of $0.29 per share is payable on March 26, 2010 to shareholders of record as of March 8, 2010. This dividend increase marks the 17th consecutive annual dividend increase by the company.
Contact:
MEDIA
Calvin Mitchell III
Senior Vice President, Corporate Affairs
+1 646 223 5285
calvin.mitchell@thomsonreuters.com
Victoria Brough
Head of External Affairs, EMEA
+44 207 542 8763
victoria.brough@thomsonreuters.com
INVESTORS
Frank Golden
Senior Vice President, Investor Relations
+1 646 223 5288
frank.golden@thomsonreuters.com
Topic: Press release summary
Source: Thomson Reuters
Sectors: IT Individual, Broadcast, Film & Sat
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