Aon Posts Upbeat Q1 Profit, But Revenue Drops

reported stronger-than-expected earnings for the first quarter on Friday. However, the company's revenue missed analysts' estimates. The London-based company reported quarterly earnings of $328 million, or $1.14 per share, up from $325 million, or $1.06 per share, in the year-ago quarter. Excluding non-recurring items, the company's adjusted earnings rose 7 percent to $1.37 per share. Its revenue dropped 3 percent to $2.85 billion. However, analysts were expecting a profit of $1.28 per share on revenue of $2.94 billion. The average estimate among 4 Estimize users was for earnings of $1.30 per share and revenue of $2.98 billion. Risk Solutions segment total revenue fell 5 percent to $1.9 billion in the quarter, HR Solutions total revenue gained 1 percent year-over-year to $970 million. Operating margin slipped 40 basis points to 15.5 percent in the quarter, while adjusted operating margin shrank 50 basis points to 18.3 percent. Total operating expenses dropped 3 percent to $2.4 billion for the first quarter. Cash flow from operations rose $147 million to $136 million in the quarter, while free cash flow climbed $140 million to $74 million. During the quarter, the company repurchased 2.5 million Class A ordinary shares for around $250 million. "Our first quarter results reflect a solid start to the year with seven percent earnings growth despite a significant headwind from foreign currency translation. 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," said Greg Case, president and chief executive officer. Aon shares fell 1.69 percent to close at $96.23 yesterday.