By Kenneth Li and Nick Zieminski
NEW YORK (Reuters) – Thomson Reuters Corp will streamline technology, close offices and rely more on machines to prepare for a post-pandemic world, the news and information group said on Tuesday, as it reported higher sales and operating profit.
The Toronto-headquartered company will spend $500 million to $600 million over two years to burnish its technology credentials, investing in AI and machine learning to get data faster to professional customers increasingly working from home during the coronavirus crisis.
It will transition from a content provider to a content-driven technology company, and from a holding company to an operational structure.
Thomson Reuters’ New York- and Toronto-listed shares each gained more than 8%.
It aims to cut annual operating expenses by $600 million through eliminating duplicate functions, modernizing and consolidating technology, as well as through attrition and shrinking its real estate footprint. Layoffs are not a focus of the cost cuts and there are no current plans to divest assets as part of this plan, the company said.
“We look at the changing behaviors as a result of COVID … on professionals working from home working remotely being much more reliant on 24-7, digital always-on, sort of real-time always available information, served through software and powered by AI and ML (machine learning),” Chief Executive Steve Hasker said in an interview.
Sales growth is forecast to accelerate in each of the next three years compared with 1.3% reported sales growth for 2020, the company said in its earnings release.
Thomson Reuters, which owns Reuters News, said revenues rose 2% to $1.62 billion, while its operating profit jumped more than 300% to $956 million, reflecting the sale of an investment and other items.
Its three main divisions, Legal Professionals, Tax & Accounting Professionals, and Corporates, all showed higher organic quarterly sales and adjusted profit. As part of the two-year change program, the corporate, legal and tax side will operate more as one customer-facing entity.
Adjusted earnings per share of 54 cents were ahead of the 46 cents expected, based on data from Refinitiv.
The company raised its annual dividend by 10 cents to $1.62 per share.
The Reuters News business showed lower revenue in the fourth quarter. In January, Stephen J. Adler, Reuters’ editor-in-chief for the past decade, said he would retire in April from the world’s largest international news provider.
Thomson Reuters also said its stake in The London Stock Exchange is now worth about $11.2 billion.
The LSE last month completed its $27-billion takeover of data and analytics business Refinitiv, 45%-owned by Thomson Reuters.
(Reporting by Ken Li, writing by Nick Zieminski in New York, editing by Louise Heavens and Jane Merriman)