Marsh & McLennan CEO Glaser 'excited' about growth prospects as revenue up 16% in Q2 2019 post JLT merger
Broker Marsh & McLennan's chief executive Dan Glaser is "pleased" with the company's second quarter 2019 results, which include Jardine Lloyd Thompson (JLT) for the first time.
The company reported an uptick in the revenue growth, which was $4.3 billion in Q2 - an increase of 16 percent compared with the second quarter of 2018. For the six months ended June 30, 2019, consolidated revenues were $8.4 billion, an increase of 9 percent.
However, the firm's total net income declined year on year from $531 million in Q2 2018 to $332 million in the same quarter this year. In H1 2019, the net income was $1 billion.
MMC noted that the second quarter results included the costs related to the JLT acquisition of $150 million which is comprised of costs to close the transaction and related debt refinancing. Restructuring and integration costs related to JLT were $98 million in the quarter.
The company completed the acquisition of JLT for $5.6 billion in fully diluted equity value on April 1, 2019, and assumed existing JLT debt of approximately $1 billion. It repaid JLT’s $450 million revolving credit facility with proceeds from 2019 debt issuances. The remaining $550 million of senior notes assumed was refinanced in the quarter using cash on hand and an incremental $300 million one year term loan.
"We are pleased with our second quarter results, which include Jardine Lloyd Thompson for the first time," said Glaser. "We generated solid growth in underlying revenue and adjusted EPS while welcoming 10,000 new colleagues."
"In the quarter, consolidated underlying revenue grew 4%, adjusted operating income rose 19% to $894 million, adjusted EPS grew 7% to $1.18 and our overall adjusted margin expanded 150 basis points. We are tracking well against our plans and are excited about the long-term growth prospects for our combined firm," Glaser added. "We delivered solid performance in the first half of 2019, with 4% underlying revenue growth, 9% adjusted EPS growth, and adjusted margin expansion of 160 basis points."
The revenue of reinsurance broker Guy Carpenter, which is a subsidiary of MMC, was $392 million in Q2 2019, a decrease of 3 percent on an underlying basis. For the six months ended June 30, 2019, the underlying revenue growth was 2 percent.
Consultancy unit Mercer's revenue was $1.3 billion in the second quarter, an increase of 2 percent, and Oliver Wyman's revenue was $540 million in the second quarter, an increase of 13 percent.
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