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Thomson Reuters posts earnings beat, hunts for acquisitions By Reuters

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© Reuters. FILE PHOTO: CEO Jim Smith speaks during the Thomson Reuters annual general meeting for shareholders in Toronto

By Matt Scuffham

TORONTO (Reuters) – Thomson Reuters reported better-than-expected earnings on Tuesday, helping push its shares to a record high, and said it is continuing to look for acquisitions to bolster its Legal and Tax & Accounting units, where demand is up in part because of U.S. tax reforms.

Shares in the news and information provider rose 5 percent in early trading to C$73.24, marking a record high. They have benefited from the company buying back $10 billion worth of shares since August.

Thomson Reuters reported fourth-quarter revenue of $1.52 billion, compared with $1.41 billion a year ago. Earnings excluding special items were 20 cents per share, down from 22 cents per share a year ago but significantly above the average analyst forecast of 6 cents per share according to IBES data from Refinitiv.

Thomson Reuters sold a 55-percent stake in its Financial & Risk (F&R) unit to private equity firm Blackstone (NYSE:) Group LP last October in a deal that valued the unit, now a standalone business called Refinitiv, at about $20 billion.

The company has set aside $2 billion of the $17 billion proceeds from the Blackstone deal to make purchases to help grow its Legal, Tax & Accounting and Corporates businesses.

“We have a number of potential targets,” Chief Executive Jim Smith told analysts on a conference call. “We’re in the process of prioritizing those targets and, in some cases, beginning some discussions, but we’re not on the verge of pulling the trigger on something big right now.”

Smith told Reuters News in an interview that market valuations were “challenging.”

“We have to make certain we find not only the right strategic fit but the fit that makes financial sense as well. It’s a pretty frothy M&A market at the moment,” he said.

Smith said U.S. tax reforms were helping stimulate demand for the company’s tax and accounting products.

“Rapid regulatory change is good for our business,” he said.

Legal, Corporates and Tax & Accounting are the three biggest units following the F&R deal.

Excluding exchange rates, Legal revenue rose 4 percent during the quarter to $599 million. Tax & Accounting sales rose by 8 percent to $248 million. Sales to corporate clients rose by 7 percent to $315 million.

“We were encouraged by sales growth during the quarter,” said Edward Jones analyst Brittany Weissman. “There are still many moving pieces in the results following the sale of the F&R business, but Thomson Reuters is seeing early signs of success in accelerating sales growth and improving profitability.”

Earnings were better than expected due to a lower tax rate and the share buyback, Weissman said.

For 2019, the company forecast adjusted earnings of $1.4 billion to $1.5 billion, up from $1.4 billion in the current year.

The company has retained a 45-percent stake in Refinitiv, which sells data and news primarily to financial customers. Under the agreement with Blackstone, Refinitiv will make minimum annual payments of $325 million to Reuters over 30 years, adjusted for inflation, to secure access to its news service, equal to almost $10 billion in all.

Refinitiv revenue grew by 3 percent, excluding currency movements, to $1.55 billion during the quarter, Thomson Reuters said.

Thomson Reuters, controlled by Canada’s Thomson family, is the parent of Reuters News. Revenue from Reuters News more than doubled to $155 million, reflecting a first-time contribution from the Refinitiv deal. Smith told analysts on a conference he expects the division to be a stronger contributor to the overall profitability going forward.

For 2018 as a whole, Thomson Reuters reported overall revenue growth of 4 percent. Revenues excluding the impact of the Blackstone deal rose by 2.5 percent.

For 2019, the company is forecasting organic revenue growth of 3 to 3.5 percent. For 2020, it expects revenue growth of 3.5 percent to 4.5 percent, in line with December guidance.





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Dow, S&P futures gain on hopes of progress in stimulus talks By Reuters

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© Reuters. FILE PHOTO: A Wall Street sign is pictured outside the New York Stock Exchange, in New York City

By Medha Singh

(Reuters) – Futures tracking the S&P 500 and the Dow edged higher on Friday, as investors anticipated progress in bipartisan talks over the next coronavirus aid bill ahead of the Nov. 3 presidential election.

U.S. House Speaker Nancy Pelosi said on Thursday there was progress in negotiations with the White House, but Senate Republicans remained skeptical of a possible deal costing trillions of dollars.

Uncertainly over the timeline of the relief legislature has been weighing on Wall Street’s major indexes, which were set to end a choppy week slightly lower.

Meanwhile, a record 47 million Americans cast ballots, eclipsing total early voting from the 2016 election. President Donald Trump and Democratic rival Joe Biden debated on Thursday for the last time to persuade the few remaining undecided voters 12 days before their contest.

At 06:24 a.m. ET, Dow E-minis were up 0.31% at 28,352 points, S&P 500 E-minis rose 0.17% to 3,455 points. E-minis fell 0.07% to 11,643 points.

Third-quarter earnings season chugged along with 126 S&P firms having reported so far. About 84% of them have topped quarterly profit estimates, according to Refinitiv data.

Chipmaker Intel Corp (O:) tumbled nearly 10% in premarket trading after it reported that margins fell as consumers bought cheaper laptops and pandemic-stricken businesses and governments clamped down on data center spending.

Gilead Sciences Inc (O:) jumped 5.8% as its antiviral drug remdesivir became the first and only drug approved for treating patients hospitalized with COVID-19 in the United States.

Apple Inc (O:) edged 0.3% higher as two of its latest iPhone 12 models went on sale in China on Friday.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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StockBeat: Hotel Heartbreak Eases – a Little

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© Reuters.

By Geoffrey Smith 

Investing.com — The hotel industry began the long road back to some kind of normality in the third quarter, but figures from Europe’s two biggest operators show just how long it will be.

Revenue per available room, the key metric for hotel investors, was down 53% at InterContinental Hotels Group (LON:), which owns the Holiday Inn and associated franchises in the three months, and was down 63% at Accor (PA:), owner of the Ibis and Sofitel chains among others.

The figures, while dismal, were in both cases a significant improvement from the second quarter, and Accor’s shares in particular profited, rising 4.2% by mid-morning in Europe on Friday after CEO Sebastien Bazin said that the worst was behind the company. IHG stock fell 1.3%.

However, this is a pallid optimism. Even Bazin’s group is predicting that bookings won’t return to pre-pandemic levels until 2023. In the meantime, Bazin told France 24, “60% of the hotel industry is distressed, 40% is optimistic” as they face the prospect of full winter of Covid 19.

On Thursday, France had extended its curfew to an area covering three-quarters of its population after posting its highest daily figure yet for new infections. In Spain, Germany and the U.K., all key markets, officials bemoan that the virus is currently out of control, despite various attempts to restrict non-essential social contact.  Bazin urged European governments to be more clear and coordinated in their guidelines on travel, after an abortive summer tourism season when official guidelines changed at dizzying speed and with little or no consistency.

IHG CEO Keith Barr acknowledged that “uncertainty remains regarding the potential for further improvement in the short term.”

Barr’s conservatism is an implicit acknowledgment that he expects the U.S. market, which accounts for more of IHG’s business, to broadly follow the European one as the latest wave of the pandemic gains force there. That could leave Asia as the sole ray of sunshine for both companies. At IHG, RevPAR has already recovered to be down only 23% year-on-year in Greater China.

Both CEOs strove to put a brave face on the medium term, however. And not without reason: conventional wisdom says that when the vaccines are finally distributed and fear of public spaces recedes, hotel stocks should be among the best performers around. Pent-up demand and fading tail risks should allow a violent reversion to the mean.

But is there anything to hope for beyond that? The pre-pandemic assumptions of endless growth in world tourism will have to be tested anew as life returns to normal, and business travel budgets will remain crimped long after the vaccines arrive. IHG has in general created value over the last two decades but Accor hasn’t posted a new all-time high since 2007, and even though Bazin is finally pushing the group towards an ‘asset light’ model that should generate higher returns on equity and demand a higher valuation, the onus is squarely on him to prove it. 

Talking to Bloomberg TV earlier, Bazin dismissed the notion of M&A activity, which would offer the quicker path to capacity rationalization and higher margins. That may disappoint some, but the truth is that Accor’s current valuation doesn’t allow to hope for an active role in any such consolidation. The question is only whether or not Accor is ‘in play’.

IHG may have the better opportunities for driving the process, but Barr gave no hint of anything on the horizon in his statement. For investors, holding the stocks continues to require even more patience and tolerance of uncertainty than for most other assets.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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China’s carmakers seek more government support for smart car supply chain By Reuters

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© Reuters.

By Yilei Sun and Brenda Goh

XIAN, China/SHANGHAI (Reuters) – China’s auto industry has called for more government support and tie-ups between auto and tech companies on technologies, such as software and semiconductors, to make the country’s smart car supply chain more self-sufficient.

Government officials and industry executives at the 2020 China Auto Supply Chain Conference, held in the northwestern city of Xian this week, said the supply chain of in-car operating systems and other core technologies lagged behind international levels, a situation they want to change.

China, the world’s biggest auto market, wants sales of vehicles with intelligent functions like internet connectivity and autonomous driving to make up 30% of overall new vehicle sales by 2025.

Beijing has been trying to boost domestic tech capability by pouring billions of dollars into sectors such as semiconductors, after trade tensions between China and other countries, including the United States, exposed the country’s reliance on foreign know-how.

“China’s supply chain of in-car operating system, software and other key core technologies are still far behind the international advanced level,” Ma Chunsheng, an official at the Ministry of Industry and Information Technology, said.

Ma said the government will encourage companies from different industries to work together on key technology breakthroughs like car operation systems.

“Technology startups face financial difficulties and urgently need the government to issue strategic support measures,” said Luo Junmin, senior executive at the China Association of Automobile Manufacturers. Jumin said the government should offer better fundraising platforms to those companies to “support the transformation and upgrading of the automobile industry.”

In-car software and semiconductor products are expected to make up the majority of cars costs by 2030, a recent research report by consultancy Roland Berger and industry think tank China EV 100 estimated.

Chinese internet companies, including Alibaba (HK:) and Baidu (O:), have launched partnerships with automakers, while Huawei Technologies, BYD (SZ:) and startup Horizon Robotics are developing semiconductor products.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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