Willis Group Holdings plc
) reported third-quarter 2012 adjusted net income from continuing
operations of 22 cents per share, falling short of the Zacks
Consensus Estimate by 8 cents.
Results were also 46% lower than 41 cents earned in the
year-ago quarter. Adjusted net income from continuing operations
was $38 million, down 47% year over year. Lower revenue coupled
with higher expenses weighed on the performance.
MARSH &MCLENNAN (MMC): Free Stock Analysis
WILLIS GP HLDGS (WSH): Free Stock Analysis
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Including an $11 million charge related to a settlement with a
former joint venture partner in India and a $1 million loss on
disposal of the Indian operations, the company reported net
income of $26 million or 15 cents per share, comparing
unfavorably with $60 million or 34 cents earned in the year-ago
Total revenue in the quarter decreased 0.8% year over year to
$754 million due to lower commissions and fees and lower
investment income. Also, revenues lagged the Zacks Consensus
Estimate of $770 million.
Commissions and fees went down 1% year over year to $749 million
in the quarter, as foreign currency translation had a negative
impact on it.
Investment income also declined 43% from the year-ago quarter to
$4 million, attributable to lower net yields on cash and cash
Total expense increased 2.1% year over year to $684 million,
primarily due to an increase in salaries and benefits and higher
In the quarter under review, adjusted operating income was $82
million, down 22% year over year. Operating margin contracted 290
basis points to 10.9%.
: Organic growth in commissions and fees was 3% in the quarter,
while reported growth was flat with year-ago level.
Organic growth was primarily driven by mid double-digit increase
in Global Specialties.
Operating margin was 22.1%, contracting 50 basis points year over
: Commissions and fees, on an organic basis and reported basis
remained flat with year-ago level.
Operating margin in the quarter contracted 280 basis points.
: Commissions and fees increased 5% year over year on an organic
basis, while on a reported basis, it declined 2%. Asia and Latin
America reported mid teen-digit growth, while the UK business was
up in low single-digits. On the flip side, Australasia and Europe
were each down in low-single digits.
Operating margin was a negative 4.5%, compared with 1.9% in the
The cash and cash equivalent balance at quarter end stood at $424
million, down 2.7% from 2011 end.
Long-term debt edged up 0.4% to $2.4 billion from 2011 end.
Dividends and Share Buybacks
Willis spent $42 million to buy back 1.16 million shares in the
quarter. With this, it exhausted the $100 million in 2012 buyback
The company's board authorized a dividend of 27 cents to the
shareholders of record as on December 31, payable on January 15,
We retain our Neutral recommendation on Willis Group. The
quantitative Zacks #3 Rank (short-term Hold rating) for the
company indicates no clear directional pressure on the stock over
the near term.
Marsh & McLennan Companies Inc.
), which competes with Willis Group, also shares a Zacks #3 Rank
and is scheduled to release its third quarter results before the
opening bell on November 6.