Aon Reports $328M in Q1 Net Income, Compared to $325M in Q1 2014

May 1, 2015

Aon plc reported net income attributable to Aon shareholders of $328 million, or $1.14 per share, compared to $325 million, or $1.06 per share, for the prior year quarter.

Net income per share attributable to Aon shareholders, adjusted for certain items, increased 7 percent to $1.37, compared to $1.28 in the prior year quarter, including a $0.15 per share unfavorable impact on adjusted net income from continuing operations if the company were to translate prior year quarter results at current quarter foreign exchange rates.

“Our first quarter results reflect a solid start to the year with 7 percent earnings growth despite a significant headwind from foreign currency translation,” according to Greg Case, president and chief executive officer. “Results are highlighted by solid organic revenue growth across both Risk and HR Solutions, underlying operational improvement, effective capital management, and substantial free cash flow generation, enabling the repurchase of approximately $250 million of ordinary shares in the quarter.”

Case said the company expects continued progress throughout 2015 “as our industry-leading platform and our investments in innovative client-serving capabilities have positioned the firm for sustainable long-term growth, increased operating leverage and significant free cash flow generation towards our goal of $2.3 billion for the full year 2017.”

Other first quarter highlights include:

  • Total revenue decreased 3 percent to $2.8 billion compared to the prior year quarter when the company reported $2.9 billion in total revenue. This year’s first quarter revenue figures were driven primarily by a 7 percent unfavorable impact from foreign currency translation, partially offset by 3 percent organic revenue growth and a 1 percent increase in commissions and fees related to acquisitions, net of divestitures.
  • Total operating expensesfor the first quarter decreased 3 percent to $2.4 billion compared to the prior year quarter due primarily to a $140 million favorable impact from foreign currency translation and a $6 million decrease in intangible asset amortization, partially offset by an increase in expense associated with 3 percent organic revenue growth.
  • Operating margin decreased 40 basis points to 15.5 percent, and operating margin, adjusted for certain items, decreased 50 basis points to 18.3 percent.
  • EPS was $1.14, and EPS, adjusted for certain items, increased 7 percent to $1.37.
  • Cash flow from operations increased $147 million to $136 million, and free cash flow increased $140 million to $74 million. The increase in cash from operations was due primarily to a decline in pension contributions, working capital improvements and a decline in cash paid for taxes and restructuring.
  • Effective tax rate in the first quarter was 19.1 percent, similar to the prior year quarter of 18.9 percent.
  • Foreign currency exchange rates in the first quarter had a $0.15 per share, or $53 million pretax, unfavorable impact (-$50 million in Risk Solutions, -$6 million in HR Solutions, +$3 million in unallocated expenses) on adjusted net income from continuing operations if the company were to translate prior year quarter results at current quarter foreign exchange rates.
  • A repurchase of 5 million Class A Ordinary Shares for approximately $250 million.
  • On February 2, 2015, Aon completed its acquisition of UK-based Kloud, the largest dedicated Workday consultancy firm outside of the United States, advancing Aon Hewitt’s ability to serve clients as one of the world’s largest Workday providers.

Source: Aon plc

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