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Aon quarterly revenue rises 8.2%; discontinued operations hit profit

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Aon quarterly revenue rises 8.2%; discontinued operations hit profit

Aon P.L.C reported 2018 second-quarter revenue of $2.56 billion, up 8.2% from the second quarter of 2017, even as net income plunged as a result of discontinued operations, the brokerage said in its earnings statement Friday.

Organic growth for the quarter was 5%, up from 3% in the first quarter of this year.

Net income, however, plunged to $48.0 million from $769 million in the year-ago period, due to a huge swing in income from discontinued operations to just $1.0 million from $821 million a year ago.

Aon sold its employee benefits outsourcing business in 2017 in a  $4.8 billion deal with Blackstone Group L.P. 

The brokerage has made a number of management changes and instituted a new structure and branding intended to drive growth. 

Combining units “is about growth for us,” Aon CEO Greg Case said on the company’s earnings call with analysts Friday. “It really is about accelerating our growth. That plus (mergers and acquisitions) we think is a very, very strong engine.”

“It underpins organic growth,” Mr. Case said. “We expect a continued progression. If you think about the last four years — 3%, 3%, 4%, 4% — and we’ve got momentum building on that and expect to continue.”

For the quarter, commercial risk solutions revenue rose 11.9% to $1.17 billion from a year ago, with 6% organic growth.

For the six months ended June 30, revenue rose 19% to $5.65 billion compared with the first half of 2107.

First-half organic growth was 4%, up from 3% in first half 2017, according to Christa Davies, executive vice president for global finance and chief financial officer for Aon, also speaking on the call.

Six-month net income dropped 39.4% to $642.0 million compared with a year ago, again on discontinued operations

In addition to accelerating organic growth, M&A is continuing to contribute, both improving the mix and driving total growth of 11% for the first half of 2018, Ms. Davies said.

2017 will be the company’s peak year for restructuring cash usage, Ms. Davies said.

Aon has undertaken cost savings actions, such as leveraging technology to put in place a cloud-based procurement system which is more centralized and expected to “contribute $30 million in value in 2018,” Ms. Davies said.

 

 

 

 

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