Willis Group Reports Mixed 1Q - Analyst Blog
27 4월 2012 - 10:54PM
Zacks
Willis Group Holdings plc (WSH) reported
first-quarter 2012 adjusted net income from continuing operations
of $1.32 per share, beating the Zacks Consensus Estimate by 6
cents. Results were 2.3% higher than $1.29 earned in the year-ago
quarter. Adjusted net income from continuing operations was $233
million, up 4% from $224 million in the prior-year quarter.
The improvement resulted from improved top line coupled with
lower expenses.
Adjusting for write-off of uncollectible accounts receivable
balance and legal fees of $8 million or 4 cents a share, the
company reported net income of $225 or $1.28 per share, a
substantial improvement from $35 million or 20 cents in the
year-ago quarter.
Operational Performance
Total revenue in the quarter inched up 0.6% year over year to
$1.01 billion. The improvement came on the back of a slight
increase in commissions and fees. Revenues, however, lagged the
Zacks Consensus Estimate of $1.03 billion.
Commissions and fees crept up 0.6% year over year in the
quarter, based on higher numbers at the Global and International
segments.
Investment income for Willis in the quarter declined 37% from
the year-ago quarter to $5 million, on the back of lower net yields
on cash and cash equivalents.
Total expense decreased 9.4% year over year to $696 million,
primarily due to a decline in salaries and benefits.
In the quarter under review, adjusted operating income was $330
million, down 1% year over year. Operating margin contracted 40
basis points to 32.6%.
Segment Update
Global: Organic growth in commissions and fees
was 5% in the quarter, while reported growth was 4%.
Organic growth was primarily driven by high single-digit
increase in Reinsurance business, which benefited from new business
growth and improved rate environment.
Operating margin was 48.1%, contracting 80 basis points year
over year.
North America: Commissions and fees declined 2%
year over year on an organic basis while it slipped 3% on a
reported basis. Soft performance of Loan Protector business
affected organic growth.
Operating margin in the quarter expanded 110 basis points.
International: Commissions and fees increased
4% year over year on an organic basis with on a reported basis, it
grew 1%. Eastern Europe and Latin America grew by double digits
while Asia reported high single-digit growth. In Europe, the
continental business grew in the low single-digits while the UK
business declined in the mid single-digits.
Operating margin contracted 210 basis points to 27.7%.
Financial Update
The cash and cash equivalent balance at quarter end stood at
$464 million, up approximately 6.4% from 2011 end.
Long-term debt increased 3.4% to $2.43 billion from 2011
end.
Dividends and Share Buybacks
The company’s board authorized a dividend of 27 cents to the
shareholders of record at June 30, payable on July 13. This
dividend represents an increase of 3.8%
Willis expects to repurchase shares worth up to $100 million in
2012. As such, the company spent $21 million to buyback 0.6 million
shares in the first quarter.
Zacks Rank
The quantitative Zacks #3 Rank (short-term Hold rating) for the
company indicates no clear directional pressure on the stock over
the near term.
Headquartered in London, the United Kingdom, Willis Group
Holdings plc and its subsidiaries provide a broad range of
insurance brokerage, reinsurance and risk management consulting
services to its worldwide clients, both directly and through its
associates. Marsh & McLennan Companies Inc.
(MMC), which competes with Willis Group, is
scheduled to release its first quarter results on May 1, before the
bell.
MARSH &MCLENNAN (MMC): Free Stock Analysis Report
WILLIS GP HLDGS (WSH): Free Stock Analysis Report
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