Boston, MA 04/28/2014 (wallstreetpr) – Aon Plc (NYSE:AON) reported double-digit earnings growth with strong performance over Risk solutions in its first quarter ended March 31, 2014.
Positive organic growth
Aon’s organic revenue increased by 2% year over year due to positive growth across Risk and HR Solutions. It includes 3% increase in revenue from both reinsurance and retail brokerage.
Adjusted operating income was $555 million due to increased organic revenue, reduced operating expenses and restructuring savings of ~$11 million from Risk Solutions. It improved the operating margin to 18.8% from 18.5% and offset the lower operating income of HR Solutions resulted due to increased expenses.
Aon Plc (NYSE:AON) posted double-digit (15%) growth in adjusted earnings to $1.28 per share, from $1.11 per share in prior year period as a result of strong operating performance.
Weak cash flow
The Company reported weak operating cash flows during 1Q2014 compared to prior year period due to higher ($64 million) payouts of annual incentives. However, solid working capital performance and lower pension payouts offset further decline. Free cash flow to use was $66 million, down by $60 million due to increase the use of cash in operation. In addition, share repurchase of $600 million during 1Q2014 further compress the net cash balance.
Financial sound
Despite weak cash flows, Aon is financial sound with strong balance sheet. As of March 31, 2014, Aon’s cash balance was $338 million with total debt of $4.7 billion and shareholder’s equity of $7.9 billion. The Company has solid financial strength to finance its operation with total debt to capital ratio of 37.4%.
Moving forward
Aon Plc (NYSE:AON) expects growth across all regions in Risk Solutions with increasing growth over reinsurance and brokerage services. The Company continues to invest in innovative solutions to support long-term growth and generate a stable free cash flow that help to increase its financial flexibility and in line with the industry average.
