Thomson Reuters has reported a 15 per cent fall in operating profit because of declining revenue and higher costs at its division that serves the financial industry.
The slip in profit in the third quarter underscored the problems facing some clients of the news and information provider, such as banks and brokerages that are reducing staff and trimming costs to cope with increased regulation and the struggling global economy.
Thomson Reuters reaffirmed its 2012 forecast, and its underlying operating profit, which excludes divestitures, fell to $585 million (€454.2 million) from $690 million (€535 million). The corresponding margin slipped to 18.5 per cent from 21.6 per cent in the same period a year ago.
The company said that in the third quarter last year, its underlying profit margin was "the high-water mark" for 2011.
Third-quarter revenue from ongoing businesses this year rose 1 per cent before currency changes to $3.2 billion, in-line with analysts' expectations. Stripping out acquisitions, divestitures and currency changes, revenue fell 1 per cent.
An increase in revenue of 1 per cent and 3 per cent at the company's Legal and Tax & Accounting divisions, respectively, could not offset a 2 per cent decline in organic revenue at the Financial & Risk division, which serves banks.
The company's trading business within its Financial & Risk operation recorded an 8 per cent decline in revenue to $816 million in the quarter. Before currency effects it dropped 4 per cent.
Thomson Reuters chief executive James Smith warned that revenue growth still faces a "challenging environment." But he expects further operational improvements to make its businesses more efficient, helping the company meet its full-year financial targets.
In February, Mr Smith forecast 2012 revenue growth in the low single-digits and underlying operating profit margin of between 18 per cent and 19 per cent.
For the quarter, Thomson Reuters reported adjusted earnings per share of 54 cents, unchanged from the prior-year period.
The company recorded a net tax benefit of $140 million in the period, a reversal of a tax expense of $145 million in the same period a year earlier.
New York-listed shares of Thomson Reuters are up 6 per cent at $28.43 year-to-date, while its Toronto-listed shares are up 3 per cent at C$28.43.