2011 Financial Roundup: Thomson Reuters, Reed Elsevier, McGraw-Hill
Jinfo Blog

By Nancy Davis Kho

Abstract

With Q4 2011 and full year financial reporting trickling out from vendors over the past month, it appears that while last year's revenue growth for the information industry may have been modest, continued cost-cutting efforts enabled the big players to achieve respectable profitability targets, especially given the languishing global economy.

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With Q4 2011 and full year financial reporting trickling out from vendors over the past month, it appears that while last year's revenue growth for the information industry may have been modest, continued cost-cutting efforts enabled the big players to achieve respectable profitability targets, especially given the languishing global economy.

Thomson Reuters clocked revenue growth of five per cent both for the quarter and for the year, to $12.9 billion, with a jump in operating profit of nine per cent over 2010. This came after a $50 million charge related to the reorganisation of the Markets division that I wrote about in December that saw the departure of CEO Tom Glocer and a reshuffling to shore up the company's ambitions to have the Eikon platform compete against Bloomberg.

In his remarks to the financials, new CEO James C. Smith says, "… we made significant strides in kick-starting the growth engine in our former Markets division." The pressure is on that group, given that TR's Professional Services division's revenues were up nine per cent to $5.4 billion compared to two per cent growth ($7.5 billion) in the Markets division for the year.

Meanwhile, over at Reed Elsevier, revenue growth was more sluggish, coming in at two per cent for the year, and actually fell a percentage point after acquisitions and disposals and currency translation effects, to £6,002 million. Even so, profits grew at a healthier five per cent rate to £1,626m over 2010, enabling the company to recommend a six per cent increase in shareholder dividends for the year.

In its financials, CEO Erik Engstrom points to continued progress in exiting businesses that no longer align with the company's strategic vision, and to "bolt-on" acquisitions of high growth data services, as exemplified by its September acquisition of US financial data vendor Accuity Inc.

McGraw-Hill also came in with two per cent overall revenue growth for 2011, but the increase in profit varied wildly by division. S&P Capital IQ/S&P Indices, formerly the McGraw-Hill Financial segment, saw a 14% revenue increase over 2010, with an increase in operating profit of 28% to $403 million. But profits fell by four per cent to $728 million for the Ratings Division, and the McGraw-Hill Education division saw a revenue decline of six per cent  to $2.3 billion.

You'll recall that McGraw Hill eliminated 800 positions from the Education division in the fourth quarter and, as it's put in the financial summary by Harold McGraw III, chairman, president and CEO of The McGraw-Hill Companies, the company "realigned our benefit programs" (i.e. froze employee pensions) as part of its efforts to achieve $100 million in cost reductions.

It's unlikely that any of these vendors will look back at 2011 as the financial highlight of their company's history, but the fact that they've managed to achieve both growth – however limited – and profitability in all cases during yet another recession year points to an admirable strategic focus.

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