Marsh & McLennan Companies Reports Fourth Quarter
Marsh & McLennan Companies Reports Fourth Quarter 2012 Results
GAAP EPS Increases to $.47 for the Fourth Quarter and $2.13 for the Year
Adjusted EPS Grows 13% to $.52 for the Fourth Quarter and 21% to $2.15 for the Year
Excellent Full-Year Results Reflect Growth Across All Operating Companies
NEW YORK--(BUSINESS WIRE)--Feb. 12, 2013-- Marsh & McLennan Companies, Inc. (NYSE: MMC), a global professional services firm providing advice and solutions in risk, strategy and human capital, today reported financial results for the fourth quarter and year ended December 31, 2012.
Dan Glaser, President and CEO, said: “We are pleased with Marsh & McLennan Companies' performance. Adjusted operating income rose 10% in the fourth quarter. For the third consecutive year, both Risk and Insurance Services and Consulting achieved double-digit growth in adjusted operating income, contributing to overall growth of 12%.
“Marsh's results in 2012 were excellent. Underlying revenue grew 5%. This performance was driven by growth in new business and continued high client revenue retention rates. Guy Carpenter's underlying revenue growth of 6% marked its highest increase in several years. In Consulting, both Mercer and Oliver Wyman contributed to the segment's growth in revenue and profitability in 2012.
“We look forward to the next chapter in our journey to become one of the world's elite enterprises. We will strive to provide outstanding, innovative services to clients, make Marsh & McLennan Companies a great place to work for our colleagues and deliver long-term profitable growth for shareholders,” concluded Mr. Glaser.
Consolidated Results
Consolidated revenue in the fourth quarter of 2012 was $3 billion, an increase of 3% on both a reported and underlying basis compared with the fourth quarter of 2011. Underlying revenue measures the change in revenue using consistent currency exchange rates, excluding the impact of certain items such as acquisitions, dispositions and transfers among businesses. Operating income rose 4% to $406 million, compared with $391 million in the prior year period. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 10% in the fourth quarter to $450 million.
Income from continuing operations was $265 million, or $.47 per share, in the fourth quarter. This compares with $244 million, or $.44 per share, in the fourth quarter of 2011. Net income was $259 million, compared with $256 million in the fourth quarter of 2011. Adjusted earnings per share in the quarter was $.52, an increase of 13% from $.46 in the fourth quarter of 2011.
For the full year 2012, revenue increased 3% to $11.9 billion, or 4% on an underlying basis. Operating income rose 12% to $1.8 billion, compared with $1.6 billion in the prior year. Adjusted operating income also grew 12%, to $1.9 billion. Income from continuing operations was $1.2 billion, or $2.13 per share, compared with $982 million, or $1.73 per share, in 2011. Adjusted earnings per share for 2012 increased 21% to $2.15, or 16% excluding the impact of $72 million of expense from the early extinguishment of debt in 2011.
Risk and Insurance Services
Risk and Insurance Services revenue increased 3% to $1.6 billion in the fourth quarter of 2012. Operating income increased 6% to $322 million, compared with $304 million. Adjusted operating income in the quarter increased 8% to $312 million from $290 million. For the year, Risk and Insurance Services revenue was $6.6 billion, an increase of 4% from the prior year, or 5% on an underlying basis. Adjusted operating income rose 12% to $1.3 billion from $1.2 billion.
Marsh's revenue in the fourth quarter of 2012 was $1.4 billion, an increase of 4%, or 3% on an underlying basis. International operations had underlying revenue growth of 5% in the fourth quarter, reflecting growth of 13% in Latin America and 3% in both EMEA and Asia Pacific. In the United States/Canada division, underlying revenue was flat. For the year, Marsh's revenue was $5.5 billion, an increase of 5% on both a reported and underlying basis. Guy Carpenter's fourth quarter revenue was $198 million, an increase of 3% on both a reported and underlying basis from the fourth quarter of 2011. For the year, Guy Carpenter's revenue was $1.1 billion, an increase of 4%, or 6% on an underlying basis.
Consulting
Consulting segment revenue was $1.4 billion in the fourth quarter, an increase of 3% on both a reported and underlying basis from the fourth quarter of 2011. Operating income was $128 million in the fourth quarter, compared with $147 million in the prior year, and adjusted operating income was $179 million, an increase of 8% from $166 million. For the year, segment revenue increased 2% from the prior year period to $5.4 billion, or 4% on an underlying basis. Adjusted operating income rose 14% to $707 million, compared with $619 million in 2011.
Mercer's revenue increased 7% to $1 billion in the fourth quarter of 2012, an increase of 6% on an underlying basis. Investments, with revenue of $133 million, had underlying revenue growth of 10%; Health & Benefits, with revenue of $247 million, rose 9%; Outsourcing, with revenue of $187 million, increased 8%; Retirement, with revenue of $269 million, was up 3%; and Talent, Rewards & Communications, with revenue of $168 million, was unchanged from the fourth quarter of 2011. For the year, Mercer's revenue was $3.9 billion, an increase of 4% on both a reported and underlying basis. Oliver Wyman's revenue was $378 million in the fourth quarter of 2012, or a decrease of 3% on an underlying basis. For the year, revenue was $1.5 billion, or an increase of 3% on an underlying basis.
Other Items
The Company had investment income of $4 million in the fourth quarter of 2012, compared with an investment loss of $4 million in the fourth quarter of 2011. At the end of 2012, cash and cash equivalents was $2.3 billion, compared with $2.1 billion at the end of 2011. Net debt, which is total debt less cash and cash equivalents, was $617 million, compared with $815 million at the end of 2011. In the fourth quarter, the Company repurchased 1.4 million shares of its common stock for $50 million.
Conference Call
A conference call to discuss fourth quarter 2012 results will be held today at 8:30 a.m. Eastern time.