In their first earnings report since merging, Thomson Reuters (Toronto:TRI.TO) exceeded expectations by a significant amount, as on a pro forma basis, the company grew profits by 28 percent over last year. That includes results from both companies as if they had been one company when comparing.
Revenue on the same basis increased by 12 percent for the quarter, rising to $3.3 billion.
Polo Tang, and analyst at UBS said about the company's performance, "This implies the company (is) assuming the strong growth in markets continues throughout the year which we believe is optimistic given heavy cuts in investment banking headcount in (the second quarter)."
He was referring to the markets and tax accounting units as the major leaders in growth for the quarter for the company.
The markets division enjoyed an operating profit of 68 percent, ending at $353 million. The tax accounting unit grew by 6 percent, reaching $299 million.
Thomson Reuters Guidance
Projections by the company are revenue for 2008 should grow by 6 to 8 percent, and their cost-savings plan target should be reached ahead of schedule.
Going out further, they said cost savings by the end of 2010 should reach $1.0 billion, and by the end of 2011 should reach $1.2 billion.
While that those numbers and projections caused the stock to surge, ABN AMRO analyst Justin Diddams wasn't as impressed, saying, "I think people have got a bit over-excited about the cost savings number. ... The results are very much in line with expectations and in the medium term there's still pressure on bums on seats (in the financial services industry)."
Concerning profit margins, the company said they'll come in at between 19 and 21 percent for 2008. Free cash flow margin, minus synergy and integration costs, is expected to be at around 11 and 12 percent of revenue.
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