Thomson Reuters tops Q4 forecast, sees weaker global economy

FILE PHOTO: The Thomson Reuters logo is seen on the company building in Times Square, New York.

By Nick Zieminski and Kenneth Li

NEW YORK (Reuters) - Thomson Reuters Corp, the parent company of Reuters News, on Thursday reported higher-than-expected earnings in the fourth quarter, helped by cost cuts and gains on divestitures, but said a weakening global economy was a concern.

The news and information company reported adjusted earnings of 73 cents per share, ahead of analyst forecasts for 65 cents, according to estimates from Refinitiv.

Shares, which trade in both New York and in Toronto, where the company is based, lost about 2%. They are up about 10% over the past year.

Thomson Reuters, which owns the Westlaw legal database and the Checkpoint tax and accounting service, said "many signs" pointed to a weakening global economic environment amid rising interest rates, high inflation, and geopolitical risks.

It expects first-quarter organic sales growth at the lower end of its full-year target of 5.5-6.0%. That range is unchanged from the forecast made in November.

"As our results and guidance shows, we’re proving to be every bit as resilient as we indicated and have traditionally been," CEO Steve Hasker told Reuters in an interview.

Total revenues rose 3% in the fourth quarter to $1.765 billion, slightly ahead of expectations of $1.760 billion, according to Refinitiv. Exchange rate moves and divestitures reduced the sales growth, the company said.

Thomson Reuters delivered a good quarter, Edward Jones industrials analyst Matt Arnold said in a note, noting the company trimmed its profit margin target slightly.

"It remains on a strong growth trajectory, and we like the relative stability of demand for its core products. However, we believe these positives are currently fairly reflected in the shares."

Four of the company's five business segments showed higher sales and operating profit, with the Global Print business the exception.

Reuters News showed total sales up 7%, driven by the Reuters Events business and the company's news agreement with the Data & Analytics business of LSEG. As of Jan. 31, Thomson Reuters owned about $5.6 billion worth of LSEG shares, it said.

The company completed its two-year Change program to save on costs. After it completes a $2 billion share repurchase program in the second quarter, the company said it planned to return $2 billion in capital to shareholders and possibly conduct a share stock split. It raised its dividend for the 30th straight year.

During the fourth quarter, Thomson Reuters said it would buy SurePrep LLC, a U.S.-based provider of tax automation software and services, for $500 million in cash. That deal was completed at the start of January.

Hasker said the company had about $11 billion in capacity for deals and expected to pursue a couple this year, including adding more to its artificial intelligence capabilities.

"We've made significant investments over the last couple of years in AI. It powers many of our products," he said.

(Reporting by Ken Li and Nick Zieminski in New York; Editing by Mark Potter)