Thomson Reuters to Cut 2,000 Jobs in 150 Locations in Q4

The job cuts are part of the company's restructuring plan, which is accelerating faster than expected.

Subscription News: Thomson Reuters to Cut 2

Source: Thomson Reuters

While Thomson Reuters Corp (NYSE: TRI) third quarter earnings beat analyst predictions, this week the company announced it will eliminate 2,000 jobs, or 4 percent of its workforce, in 39 countries and 150 locations. The 100-year-old business is the world’s leading source of news and information for professional markets. It operates business in more than 100 countries and trades on the Toronto and New York Stock Exchanges.

The cuts will come primarily from the Financial & Risk division, and the Enterprise, Technology & Operations Group, created in January 2016 to unite all of the company’s chief technology officers and operations centers, reports The Globe and Mail. There will be no cuts to Reuters News newsroom staff. Thomson Reuters employs around 48,000 people worldwide.

As part of the company’s restructuring efforts, which are accelerating more quickly than anticipated, the job cuts will cost the company between $200 million and $250 million in the fourth quarter. Thomson Reuters said the job cuts will result in savings in 2017 that will be similar in magnitude to the multi-million-dollar hit in the fourth quarter. Some of the savings will be reinvested in the business.

In an interview, Thomson Reuters president and CEO Jim Smith said the said the change are part of a multi-year effort to streamline its businesses.

You May Be Interested In:

"One of The Best Conferences I Have Ever Attended."

SUBSCRIPTION SHOW 2021 explores trends impacting your business and
transforming the subscription economy (whether we want them to or not!)
and prepares your subscription business to thrive.
Join Subscription Insider Nov. 1-3, In New York or via Live Stream

“It’s about simplification and taking out bureaucracy and taking out layers all of which have added complexity and slowed us down. These actions are not driven by any reaction to market conditions or in any way coming on the back of underperformance,” Smith said.

“We’re knitting together an organization that was built with hundreds of acquisitions over decades. There’s lots of duplication for us to go after,” Smith added.

According to The Globe and Mail, it does not appear that Canadian operations will be impacted by the job eliminations. In fact, last month Thomson Reuters announced a major expansion into Canada, creating a technology hub in Toronto that will add 400 jobs over a two-year period.

Other third quarter financial highlights for Thomson Reuters include:

  • Revenues and operating profit held steady. While subscription revenue grew, that growth was offset by the impact of foreign currency and a decline in “low margin recoveries revenues.”
  • In the Financial & Risk business, recurring revenues were up 2 percent year-over-year, due to an annual price increase and a positive net sales trend.
  • In the Legal business, subscription revenues grew 3 percent year-over-year, but transactional revenues dropped 8 percent.
  • Reuters News revenue was $73 million for the quarter, a 1 percent decrease year-over-year.
  • Diluted earnings per share were $0.34, representing a 6 percent increase year-over-year, caused by the lower number of common shares outstanding.
  • Adjusted earnings per share were $0.54, representing a 20 percent increase, including a $0.03 favorable impact from currency.
  • Cash flow from operations grew 11 percent to $758 million.
  • The sale of the IP & Science business closed on October 3 for $3.55 billion in cash. Net proceeds from the sale will be approximately $3.2 billion.

“It is encouraging to see our continued progress flow through in the third-quarter numbers,” Smith said. “Our core subscription businesses are moving in the right direction, our cost controls are working, and we are increasingly confident in our execution capability. That is why we are going to pick up the pace of our transformation efforts.”

Based on the job cuts and subsequent $200 million to $250 million charge expected in the fourth quarter, Thomson Reuters has updated its full-year guidance:

  • The company anticipates low single-digit revenue growth between 2 percent and 3 percent, not including Financial & Risk’s recoveries revenue.
  • Including the anticipated charge from the job cuts, Thomson Reuters expects adjusted EBITDA to range between 25 percent and 26 percent.
  • Underlying operating profit margin will range between 16 percent and 17 percent, including the anticipated charge.
  • Free cash flow will range between $1.7 billion and $1.9 billion in 2016 with most of the cash impacted from the anticipated charge to be incurred in 2017.

After the announcement was made, Thomson Reuters’ stock price rose slightly, ending at $41.05 in after-hours trading on November 1. While the stock has experienced many highs and lows over the course of the last year, its current price is consistent with its stock price this time last year. On November 3, 2015, Thomson Reuters’ stock was valued at $41.41 per share.

000 Jobs in 150 Locations in Q4

Source: Google Finance – Yahoo Finance – MSN Money

Insider Take:

Attempting to successfully transition from a print-centric world to a digital one, Thomson Reuters is the latest news organization that has eliminated jobs as part of its restructuring plan. The Guardian announced a restructuring and job cut cuts this spring, The Globe and Mail offered buyouts to staff in September, and the Wall Street Journal and Dow Jones offered buyouts to staff last week.