Thomson Reuters (NYSE: TRI; TSX: TRI; LSE: TRIL; NASDAQ: TRIN), has reported results for the second quarter ended June 30, 2008. Thomson Reuters had pro forma revenues of $3.4 billion, an increase of 11% over the prior year period. (1) GAAP revenues were $3.1 billion, an increase of 73% over the prior year period, primarily due to the Reuters acquisition which closed on April 17, 2008.
“Our strong second-quarter results reflect continued momentum among our diverse set of businesses. We are encouraged by the robust revenue growth which we achieved despite the backdrop of a challenging economic environment,” said Thomas H. Glocer, chief executive officer of Thomson Reuters. “In light of our solid first-half results and continued positive sales momentum across the company, we are confident in confirming our full-year revenue and margin outlook.”
“We have made excellent progress on our integration plan, including the realization of cost synergies, the streamlining of our product offerings in the Markets Division, the pursuit of revenue synergies across both divisions and the achievement of our goal of becoming one company in one year,” said Mr. Glocer.
“We operate a diverse and balanced portfolio of businesses, anchored by our high-margin and resilient Professional Division and our global and pan-enterprise Markets Division. In Markets, we are benefiting from leading positions serving customers in foreign exchange, commodities, energy, corporate and emerging markets, which have more than offset weakness among our global investment banking clients, while our enterprise solutions are seeing strong sales as these large institutions re-engineer their trading operations. In the near-term, we expect to continue to deliver strong underlying profitability through integration-related savings and steady revenue growth, while we transform our Markets Division to be best positioned to capture the next cycle of strong growth.”
Revenues for the Professional Division grew 10% to $1.4 billion, led by organic revenue growth of 6%, with acquisitions adding 3% and foreign exchange contributing 1%. Online, services and software comprised 77% of total revenues and grew 13%. Print and CD represented 23% of total revenues and grew 1%.
Operating profit for the Professional Division was $412 million, a 10% increase from the prior year period. Operating profit margin for the second quarter was 30.0%, compared with 30.1% in the second quarter of 2007. Second-quarter operating profit margin improved in all segments except for Tax & Accounting which was held back by the impact of recent acquisitions.
Revenues increased 8% to $923 million. Organic revenue growth was 6%, driven by strength across Legal’s portfolio of businesses anchored by Westlaw. Westlaw Litigator continued to deliver strong results, growing 18% in the quarter, with online solutions continuing to perform well in both the U.S. and internationally. Organic revenues also benefited from robust growth for Software and Services, as FindLaw registered strong growth due to new sales and new products and Consulting Services recorded strong utilization rates.
Operating profit grew 9% to $321 million. Operating profit margin for the quarter increased 30 basis points to 34.8% compared with the prior year period.
Revenues grew 10% to $154 million. Organic revenue growth contributed 3%, acquisitions added 6%, and foreign exchange added 1%. Pro forma results for Scientific exclude the impact of Dialog as the business was sold in July 2008. Organic growth in the second quarter was led by approximately 10% sub scri ption growth for Web of Science and ISI Web of Knowledge products, as a new release launched in the fourth quarter of 2007 continues to be well received by customers.
Operating profit grew 17% to $48 million for the quarter. Operating profit margin was 31.2%, a 190 basis point increase compared with the prior year period. Operating profit and margin improvement were due to higher revenues, efficiency initiatives and the timing of expenses.
Revenues increased 9%, all of which was organic, to $109 million. Revenue growth was driven by Payer and Provider businesses. The Payer business delivered strong revenue growth of 15%. Provider was up 7% led by revenue growth from Micromedex.
Operating profit grew 11% to $10 million for the quarter. Operating profit margin increased 20 basis points to 9.2%. Healthcare is highly seasonal with approximately 70% of its annual operating profit historically generated in the fourth quarter.
Pro forma revenues for the Markets Division grew 12% to $2.1 billion. Organic revenue growth continued to be strong, increasing 7% in the quarter, with foreign exchange adding 5%. Organic growth was driven by strength in Sales & Trading, Investment & Advisory and Enterprise businesses. Asia represented the fastest growing region in the second quarter delivering 15% organic growth, while Europe, Middle East and Africa was up 9%.
Markets Division pro forma operating profit was $372 million, up 30% from the prior year. Operating profit margin for the second quarter was 18.1%, an increase of 240 basis points compared with the second quarter of 2007. The increase in pro forma operating profit reflected synergies, efficiency initiatives and foreign exchange.
Pro forma revenues increased 9% to $593 million, driven by organic growth of 8%. Growth was led by strength in the Investment Management and Corporate businesses which delivered organic growth of 12% and 20%, respectively, on the back of strong demand for both desktop and content feeds. Investment Management benefited from its focus on advanced analytics, while Corporate began to capitalize on the former Reuters strong international network, demonstrating robust growth in Europe and Asia. Investment Banking delivered organic growth of 5% driven by European and Asian demand.
Media pro forma revenues increased 12% in the second quarter to $119 million, with 2% organic revenue growth. Revenue growth from Professional and Agency businesses of 8% and 6%, respectively, was offset by timing issues on royalty payments, which are expected to be recovered in the second half of 2008, and weakness in the Consumer business in the Americas related to weaker advertising spend.