Thomson Reuters ideally positioned to lead in information economy, CEO says

Eric Shackleton, THE CANADIAN PRESS

Investor's Business Daily

May 07, 2008

- The newly merged electronic data giant Thomson Reuters Corp. (TSX:TRI) is "off to a strong start" in the global information economy, CEO Tom Glocer told the company's first annual meeting since Thomson Corp. and Reuters Group PLC closed their deal in April.

The new entity is "ideally positioned" to lead in the fast growing intelligent information market after reporting combined revenues up 12 per cent in the first quarter, he told about 500 shareholders gathered Wednesday.

He pointed to a nine per cent organic growth rate and a 37 per cent combined increase in adjusted operating income in the first quarter as strong boosts to the company's outlook.

Despite the slowing Canadian and U.S. economies, and the worldwide credit crunch, the company is projected to grow between six and eight per cent over the next three quarters, said Glocer.

"We've given guidance for this full year which is in the six to eight per cent range, and we're not at this point going to look out any further in terms of either 2009 guidance or long term growth rate," he said after the annual meeting.

"We see how well each of these companies grew separately and in particular in the financial services business. It will just be a much stronger enterprise together," said Glocer.

"I would be disappointed if the long term growth rate of the combined financial businesses weren't higher than the growth rate achieved to date of each one separately."

Glocer said three priorities have been set for the company over the next few years: integration, globalization and scale economies.

On integration, he said, Thomson Reuters should "be one company in a year" in terms of culture and general structure, which can "create a huge amount of value."

"What we're going to try and get done in one year is to make it feel like on the inside and hopefully from the outside, one company, one culture, one way of doing things, one accounting system."

"We need to and we will execute on that as quickly and as flawlessly as we can ... there I think we're really well on our way."

Full integration, though, will be a three to four year process.

In fact, he said "we given cost saving targets out to 2011."

The company will only be fully integrated when all the product migrations are done, "when we have really merged data centres, our offices are combined into one," said Glocer.

Globalization, he said, is all about "how do we tap into the higher growth rates available around the world."

For instance, in the first quarter "our business in Asia grew 14 per cent organic, and Asia continues to be very strong this year," Glocer said.

"We're well positioned to tap into those growth rates."

Scale economics, said Glocer, is "just answering the question how do you make the whole worth more than the sum of its parts...

"How do we operate these great separate businesses but then have just enough glue across them so that we can get synergies," he said.

Some of the things in the equation, he said, "are the technology platform. How do you have the world's best professional search and if it's applicable for legal, it'll probably be applicable for tax and accounting and scientific."

Another part, he said, "is how we extend the Reuters news franchise to create tailored services for some of the other businesses, and then it makes the overall file stronger."

These are some of the things CFO Robert Daleo and Glocer "will be working on at the centre of the company" over the next few years, said Glocer.

Glocer said the future bodes well for Thomson Reuters as companies and professionals around the world are hungry for "dynamic data."

The world "is professionalizing at an unprecedented rate," he said, creating a huge need for Thomson Reuters' specialized information.

Many industries, such as pharmaceutical companies, "are transforming themselves into information-based operations," he said, and Thomson Reuters is "nicely balanced" to compete in this global market for electronically delivered information.

Carl Bayard, a financial analyst with Genuity Capital Markets, said the company's projected growth rate of six to eight per cent this year could be a bit too rosy, "maybe in the near term given their large exposure to financials."

But, he said, "over the long term it's probably still something they can achieve."

Bayard said he has a "Hold" on the company's stock with a target of $42.50 a share.

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