Aon’s net income for the second quarter this year has more than doubled from the same period in 2016, the firm has announced. The British multinational said net income from April to June 2017 reached US $769 million (approximately SGD$1.04 billion), compared to US $300 million a year before.
“Our second quarter results reflect growth across all major lines of revenue, solid operating performance with 110 basis points of adjusted operating margin improvement and 13% earnings per share growth, highlighted by the repurchase of $1 billion of stock in the quarter,” said Greg Case, president and CEO.
A 3% organic revenue growth and a 3% increase related to acquisitions, net of divestitures helped drive an annualized 4% total revenue growth in the second quarter to $2.4 billion. Meanwhile, total operating expenses increased 31% to $2.5 billion from a year before.
“During the quarter, we took significant steps to strengthen our industry-leading global professional services platform, including the completed divestiture of our outsourcing businesses and initial investments in our Aon United single operating model. Combined with strong free cash flow generation and capital proceeds from the transaction, we believe we are on track to exceed $7.97 adjusted earnings per share in 2018 and deliver double-digit free cash flow growth over the long-term,” Case added.
The firm said it saved about $44 million (before reinvestment) from restructuring.
“Before any potential reinvestment of savings, restructuring and other operational improvement initiatives are expected to deliver run-rate savings of $400 million annually in 2019. To date, the company has achieved 14% of the total estimated annualized savings.”
Restructuring expenses reached $155 million in the second quarter, primarily driven by workforce reductions. Aon said it expects to invest $900 million in total cash over a three-year period, and incur $50 million of non-cash charges, in driving one operating model across the firm. This includes an estimated investment of $700 million of cash restructuring charges and $200 million of capital expenditures. To date, it has incurred 40% of the total estimated restructuring charges.
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