Thomson Reuters has swung to a fourth quarter operating loss thanks to a $3 billion goodwill impairment charge related to its struggling financial services business.
The company has seen its share price fall by a third in the last year, largely because of the markets division, which has been hit by the financial crisis and a lukewarm reception for its new flagship desktop product, Eikon, although this has seen installations rise from 8000 to 15,000 in the last three months.
As well as a number of management changes, including the departure of CEO Tom Glocer, Thomson Reuters has now broken up the markets division into smaller, more focussed business units, incurring a $50 million charge for Q4.
The vendor actually posted a five per cent increase in revenues for the three months, to $3.4 billion. Adjusted Ebitda was also up, 26%, to $864 million and underlying operating profit rose eight per cent to $657 million.
However, a $3 billion, non-cash, goodwill impairment charge was incurred thanks to testing required under International Financial Reporting Standards (IFRS). This means that under IFRS measures it posted an operating loss of $2.59 billion for the period, compared to a $307 million profit in Q4 2010. No details on the reason for the charge were given.
For the full year, revenues from ongoing businesses were $12.9 billion, a five per cent increase before currency. Adjusted Ebitda increased 20% to $3.41 billion and underlying operating profit was up nine per cent to $2.58 billion. Under IFRS measures, the full year saw an operating loss of $705 million, compared to a $1.42 billion profit for 2010.
For the fourth quarter, revenues at the old markets unit rose by two per cent, to $1.86 billion, compared to a nine per cent rise at the professionals division. There was also a two per cent revenue rise for the year at markets, to $7.49 billion.
James Smith, who took over as CEO from Glocer in December, says: "The units in the former Professional division continued to perform well and we made significant strides in kick-starting the growth engine in our former Markets division. We have simplified our organisation; we have strengthened our management team; and we are making progress toward improving our execution capability. We are focused in 2012 on a series of product launches and service improvements across all our key customer groups."