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NEW YORK- Thomson Reuters Corp reported higher-than-expected second quarter profit on Wednesday and reaffirmed its 2020 forecast in the face of global market uncertainty.
The news and information provider, which owns Reuters News, said sales in the company's legal, tax and corporate businesses are expected to rise in the current quarter.
"Results in the second quarter illustrate the resilience in our business," Chief Executive Steve Hasker, who joined Thomson Reuters this year, said in an interview.
The company was about two-thirds through a 2020 cost-cutting program, which is focused on external costs, such as consultants and travel and entertainment, and targets $100 million in savings, Chief Financial Officer Michael Eastwood added.
"We will achieve it on discretionary expenses," Eastwood said.
Edward Jones analyst Matt Arnold said in a note to clients that Thomson Reuters' "diverse customer base, combined with its recurring revenue stream, provides stability and strong cash flow generation".
Arnold maintained a "hold" rating on the stock, saying its price fairly reflects its growth outlook.
The company's New York-listed shares were down 0.5%, while its Toronto-listed shares fell 1.1%
Thomson Reuters said it saw no significant disruptions from the coronavirus crisis, adding that its 500,000 legal, tax and other professional clients were able to access its services online, working from home.
It said quarterly revenue dipped 1% to $1.405 billion and operating profit fell 18% to $365 million, from $447 million a year ago, when the quarter included some one-time items.
Adjusted earnings of 44 cents per share were ahead of the 38 cents analysts expected, according to Refinitiv, while sales met Wall Street expectations.
Thomson Reuters expects higher free cash flow for the year, between $1 and $1.1 billion, and said its three main divisions should grow sales by 3%-4% in the third quarter.
Of its three largest divisions, Legal Professionals and Corporates showed higher quarterly sales and adjusted profit, while the Tax & Accounting Professionals segment saw lower sales and adjusted profit, partly reflecting a delayed U.S. tax filing season during the pandemic.
Reuters News saw organic revenues fall 11%, reflecting the effect of the coronavirus crisis on its events business. The news division's sales are forecast to be lower in the third quarter and for the full year.
Asked about Thomson Reuters' merger and acquisitions activity, Hasker said dealmaking has been muted during the pandemic but may pick up in 2021.
"We have a healthy list of companies we monitor," he said.
(Writing by Nick Zieminski in New York; Editing by Alexander Smith) ((nick.zieminski@thomsonreuters.com; +1 347 213 0534;))