Thomson Reuters will cut 2,500 jobs, or 4 per cent of its total headcount, this year as the data group tries to improve profitability in the face of “headwinds” in the financial and legal markets on which its largest divisions depend.
Jim Smith, chief executive, said the group was “in year two of a two-year turnround” in its largest division, financial and risk, and was entering 2013 in a more confident mood. Staffing in financial institutions was “hardly robust”, he said, “but it does seem more stable than it seemed at this time last year”.
After a disappointing 2010 launch of the Eikon financial data product with which it hoped to replace old Thomson Financial and Reuters terminals, recent upgrades had led to improving retention rates and sales trends, Mr Smith said.
“When we started last year we were [adding] 200 [Eikon] customers a week. In December it was 2,000 a week,” he said, adding that Eikon desktops had risen 33 per cent to 33,900 over the fourth quarter and were now over 40,000.
Thomson Reuters had retired about 100 “legacy” products last year, and would have largely replaced Reuters 3000 Xtra terminals by the end of 2013, he said, helping it to save money spent on supporting several different systems.
Recent launches in the legal division represented “the strongest new product pipeline I can recall”, he added.
Mr Smith said the company had not yet seen any impact from rival Bloomberg Law, which a Bernstein analysis says is a more likely replacement for Reed Elsevier’s LexisNexis, “but we know what a formidable company Bloomberg can be”.
Thomson Reuters revenues rose 3 per cent for the full year and 2 per cent year on year for the fourth quarter, but adjustments for currency effects, acquisitions and disposals left organic growth flat in both periods, reflecting what Bernstein Research dubbed a “growth hangover” for professional publishers.
The group swung from a net loss of $1.39bn a year ago, when the figures reflected a $3bn goodwill impairment, to net income of $2.12bn. Adjusted earnings per share were up 8 per cent for the year to $2.12.
Cost-cutting improved operating margins before interest, tax, depreciation and amortisation but higher depreciation and amortisation for acquisitions and product launches sent underlying operating margins down 130 basis points to 18.6 per cent for the year.
In 2013, revenues would grow by low single-digits, the group forecast, with underlying operating profit margins of 16.5-17.5 per cent. Its job cuts would include about 1,000 people in businesses the group is selling.
A Bloomberg spokeswoman said its revenues increased 4.5 per cent to $7.9bn in 2012. Bloomberg, with about 315,000 financial data subscribers, plans to hire more than 500 people this year, its chief executive told staff last week.
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