In keeping with its push to streamline the business, the news and information giant will cutting two percent of its staff.
Thomson Reuters, a major provider of market data, trading systems and news, will be laying off approximately 2,000 people, or two percent of its 48,000-person work force, according to an internal memo released at the same time as the company’s third quarter results.
While the Reuters News part of the company will be spared, the Financial and Risk business unit and the Enterprise, Technology and Operations Group will bear the brunt of the layoffs, according to Thomson Reuters. Jobs will be cut across 39 countries and 150 locations.
For the Financial and Risk group, 2016 revenues inched upward growing “approximately 2 percent excluding the impact of some temporary items, primarily the impact of lower recoveries revenues and commercial pricing adjustments related to the migration of certain customers to new platforms,” officials say.
“Recurring revenues (77 percent of the segment’s revenues in the quarter) were up 2 percent, primarily due to the impact of an annual price increase and a positive net sales trend, partly offset by lower revenues resulting from the pricing adjustments referred to above and macro-economic conditions impacting large European banks and banks in several emerging markets,” according to the results report.
The company reported that transactions revenues “(15 percent of the segment’s revenues in the quarter) were up 4 percent due to increased revenue from Tradeweb, BETA brokerage processing and transactional revenues from the Risk business,” officials say. “This increase was offset by the impact of lower foreign exchange trading volumes.”
In addition, the news and information giant will be taking a “planned charge in fourth-quarter 2016” of as much as $250 million, according to the third-quarter results. “Thomson Reuters today announced that it plans to record a charge of approximately $200 million to $250 million to be incurred in the fourth quarter of 2016,” according to the results announcement. “This charge is intended to accelerate the pace of the company’s Transformation program by further simplifying and streamlining the business.”
The majority of the charges will go toward the Financial and Risk and the Enterprise, Technology and Operations Group, created in January 2016 — the groups that will be hit the hardest by the layoffs.
For the third quarter of this year, Thomson Reuters had a net income of $286 million, down from $293 million for the same quarter in 2015, officials say. Overall, revenues were $8.3 billion for the first three quarters of 2016 compared to $8.4 billion for the same period in 2015, a drop of approximately 1 percent.
“Revenues were essentially unchanged as growth in subscription revenues was offset by the impact of foreign currency and a decline in low margin recoveries revenues,” according to the results report. “Operating profit was essentially unchanged as higher subscription revenues were offset by the impact of foreign currency, which included unfavorable fair value adjustments associated with foreign currency derivatives embedded in certain customer contracts.”
“It is encouraging to see our continued progress flow through in the third-quarter numbers,” says Jim Smith, president and CEO of Thomson Reuters, in a prepared statement. “Our core subscription businesses are moving in the right direction, our cost controls are working and we are increasingly confident in our execution capability. That is why we are going to pick up the pace of our transformation efforts.”
In keeping with the transformation push, Thomson Reuters sold the IP & Science business “for $3.55 billion in cash on October 3, 2016,” officials say. “The net proceeds from the sale will be approximately $3.2 billion. The company utilized $1.7 billion of the proceeds to repay commercial paper during October and it plans to use the remaining proceeds primarily to buy back shares under its current $1.5 billion share repurchase program, further pay down debt and for reinvestment in the business.”
Market reaction on November 1 to the third-quarter results and layoff news drove up the stock price for Thomson Reuters to $41.05 when markets closed in New York, an increase 4.16 percent.
Need a Reprint?