Thompson Reuters Corp. (TRI) beat earnings forecasts on Thursday, posting a higher-than-expected quarterly profit. The company benefited from tax savings and lower costs, and also announced that it expects revenue to grow 2-3% this year.
The financial information and news provider posted fourth-quarter net earnings of $.65 a share, higher than the $.43 a share posted one year ago. Analysts were expecting $.58 per share.
The higher earnings were driven by cost controls and tax rates that were lower than expected.
Slumping oil prices, volatile currencies and concerns about slow growth in China have been weighing on financial services firms, which are the core customers of Reuters’ Financial & Risk unit. Goldman Sachs Group Inc. (GS), along with many other banks, is planning to cut expenses even further this year.
U.S. financial shares have plummeted 15.2% since the beginning of 2016, while the broader overall market in the U.S. has lost 9.4%.
Thomson Reuters competes with News Corp.’s (NWSA) Dow Jones and Bloomberg LP to gain financial customers.
Reuters Chief Executive Jim Smith noted that the fourth quarter is of key importance to the company’s Financial & Risk business, which accounts for about half of the company’s overall revenue, as this is when clients are deciding whether they want to renew for the year. The division showed that sales outpaced cancellations in the quarter, which indicates future growth. This is the seventh straight quarter of positive net sales for Reuters’ Financial & Risk unit.
Quarterly revenue just missed analysts’ estimates, falling 2% to $3.15 billion, although revenue would have been up 2% if currency were not factored into the equation. Analysts were expecting $3.17 billion.
Reuters also announced that it plans to buy back roughly $1.5 billion of its shares. The company’s forecast for 2016 does not include revenue from its Intellectual Property & Sciences unit. Reuters hopes to sell this business in the latter half of 2016.
The company announced in November that it was exploring its options for the business, which offers intellectual property and scientific information as well as services and tools to universities, governments and companies. The unit generated $1 billion in revenue in 2015. Smith, CEO, says that he would be in favor of using the proceeds from the sale to repurchase shares, and does not have any plans for any significant acquisitions in 2016.