Marsh & McLennan (MMC) Beats Q1 Earnings On Higher Revenues
Zacks Investment Research | Apr 27, 2017 10:12PM ET
Marsh & McLennan Companies, Inc. ( (NYSE:MMC) reported first-quarter 2017 operating earnings per share of $1.08, which surpassed the Zacks Consensus Estimate of 99 cents. Earnings improved 17.4% year over year due to a benefit from the required change in accounting for share-based awards.
Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 9% to $802 million in the first quarter.
Marsh & McLennan’s consolidated revenues were $3.5 billion, up 5% year over year on an underlying basis. Revenues also surpassed the Zacks Consensus Estimate by 1.1%.
Total operating expenses of $2.7 billion increased 35% year over year.
Segment Results
Revenues from the Risk and Insurance Services segment were $2 billion, up 4% year over year on an underlying basis. Adjusted operating income also grew 10% to $600 million from the last-year quarter.
A unit within this segment – Marsh – reported revenues of $1.6 billion, up 5% year over year on an underlying basis. Underlying revenues grew 5% year over year in international operations due to growth of 7% in Latin America, 11% in the Asia Pacific, 35% in EMEA (Europe, the Middle East and Africa) and 5% in the U.S.-Canada region.
Another unit under this segment, Guy Carpenter, displayed revenue growth of 4% year over year on an underlying basis to $385 million.
The Consulting segment's revenues increased 3% year over year on an underlying basis to $1.56 billion. Additionally, adjusted operating income inched up 3% year over year to $245 million.
A unit within this segment – Mercer – reported revenues of $1.1 billion, up 3% year over year on an underlying basis. Mercer’s wealth business witnessed revenues of $520 million, up 3% year over year on an underlying basis.
Another unit, Oliver Wyman Group, reported revenues of $449 million, up 4% year over year on an underlying basis.
Financial Update
Marsh & McLennan exited the quarter with cash and cash equivalents of $930 million, down 9.4% from year-end 2016.
Get The News You Want
As of Mar 31, 2016, Marsh & McLennan’s total assets were $19 billion, up 4.3% year over year.
Total equity was $6.6 billion, up 10% from year-end 2016.
Capital Deployment
In Jan 2017, Marsh & McLennan issued $500 million of 2.75% senior notes due in 2022 and $500 million 4.35% senior notes due in 2047. The company intends to utilize the net proceeds for general corporate purposes, including repayment of $250 million 2.30% senior notes on Apr 1, 2017.
Marsh & McLennan repurchased approximately 2.7 million shares of its common stock for $200 million in the first quarter.
Marsh & McLennan Companies, Inc. Price, Consensus and EPS Surprise
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