Marsh & McLennan Profit Falls More than Expected
Marsh & McLennan posted a bigger-than-expected drop in quarterly profit as it digested higher costs and hefty restructuring charges.
MMC , one of the world's largest insurance brokerages, said net income dropped to $85 million, or 16 cents per share, from $226 million, or 40 cents per share, a year earlier.
Income from continuing operations fell 46 percent to $90 million, or 17 cents a share, from $168 million, or 31 cents a share.
Revenue rose 8 percent to $2.9 billion from $2.7 billion in the year-ago quarter, while expenses rose 15 percent to $2.7 billion.
Analysts had on average expected a profit of 31 cents a share on revenue of $2.8 billion, according to Reuters Estimates.
MMC said fourth-quarter results were hurt by $44 million in restructuring charges and $13 million for legal fees arising from a 2004 lawsuit filed by then-New York Attorney General Eliot Spitzer, that was later settled.
One-time items reduced profit by about 8 cents a share, according to an investor note from Goldman Sachs analyst Tom Cholnoky, titled "Weak margins and corporate expenses drive notable 4Q miss."
New Chief Executive Brian Duperreault, installed late last month to take over from Michael Cherkasky who was replaced after MMC floundered financially, said he is intent on boosting the firm's bottom line.
Duperreault said in the company's earnings statement that the "immediate focus" was improving profitability at Marsh, MMC's main operating subsidiary, and at Kroll, a consulting unit.
MMC disclosed that operating margins -- the price customers pay for its brokerage and consulting services versus the cost of providing those services -- shrunk at Marsh and Kroll.
However, operating margin rose within the company's consulting units, MMC said.
On a consolidated basis, Marsh's operating margin was more than halved to 5.6 percent, compared with the year-ago period.