Thomson Reuters reaffirms outlook despite economic uncertainty

By Jessica Toonkel

REUTERS - Thomson Reuters Corp on Thursday reported flat quarterly revenue excluding currency effects and reaffirmed its full-year sales outlook despite uncertainty among financial services clients about the economic environment.

The news and information company reported second quarter total revenues were unchanged from a year earlier at $2.77 billion before currency, but fell 1 percent when currency changes were factored in. Analysts on average estimated $2.83 billion in revenue, according to Thomson Reuters I/B/E/S.

Net earnings were $350 million, or 45 cents per share, compared with $281 million or 33 cents per share, a year ago.

Adjusted for special items, earnings were 50 cents per share. Analysts on average, expected 49 cents per share, according to Thomson Reuters I/B/E/S.

Shares fell around 2 percent in morning trading in both New York and Toronto.

Thomson Reuters, the parent of Reuters News, competes for financial customers with Bloomberg LP as well as News Corp's Dow Jones unit.

Despite volatile markets and uncertainty among financial services clients around the recent surprise vote by Britain to leave the European Union, the company reaffirmed its forecast of positive organic revenue growth for the year.

"A lot of clients are preparing for multiple eventualities but being cautious about acting before they know what is going to happen," Chief Executive Jim Smith said in an interview.

Sales in the Financial & Risk division, which accounted for about half of the company's total revenue, outpaced cancellations for the ninth straight quarter.

Revenue in Financial & Risk, which provides news and analytics to financial services companies, fell 2 percent to $1.52 billion as more companies that distribute content through Thomson Reuters opted to bill customers directly.

However, some analysts fear that uncertainty around Brexit, which has rippled across global markets, could have negative implications for the Financial & Risk business.

Forty-three percent of the Financial & Risk's revenue is from Europe, according to estimates in a post-Brexit report by TD Securities Inc.

"I think there is no question that we are anticipating there will be continued pressure on headcount in the European banking sector, including the UK, and that will put pressure on the terminals business," Smith said.

The uncertainty, however, also provides an opportunity for Thomson Reuters to prove its value by providing clients with news and answers, he said.

Revenues in its Legal and Tax & Accounting businesses were each down 1 percent when factoring in currency, but up slightly before currency.

Earlier this month, the company announced it agreed to sell its intellectual property and science business to private equity firms Onex Corp and Baring Private Equity Asia for $3.55 billion in cash.

Smith said that deal will close by year-end.

Thomson Reuters will use proceeds from the transaction to buy back shares, pay down debt and reinvest in the business.

(Reporting By Jessica Toonkel; Editing by Nick Zieminski)