WTW grows 7% organically; cuts 2024 margin, EPS outlook on ‘headwinds’
Global broking giant WTW enjoyed 7% revenue growth in the second quarter of 2023, but has reduced its 2024 adjusted operating margin and EPS targets to account for “short-term trends”, including headwinds from prior-year book sales, inflationary conditions and investment costs. In line with its ongoing strategy to reinforce investment in talent and elevate specialisation, the company has made a significant hire of Lucy Clarke as the global head of Risk & Broking, starting in the third quarter of 2024.
WTW reported a total revenue of $2.16 billion for the second quarter, an increase of 6% as compared to $2.03 billion for the same period in the prior year. On an organic basis, the revenue increased 7%.
However, its net profit for the quarter was $96 million, down 16% compared to $114 million in the prior-year second quarter. Adjusted EBITDA for the second quarter was $411 million, a decrease of 9%, compared to Adjusted EBITDA of $450 million in Q2 2022.
In its core Risk & Broking segment, the revenue rose 6% to reach $900 million, compared with $852 million in the prior year. However, operating margins decreased 360 basis points from the prior-year second quarter to 16.1%, “primarily due to the run-rate impact of investments in talent who are continuing to ramp up in revenue production, higher travel and expense related items due to the increased volume of client-based travel, and headwinds from the impact of book-of-business settlement revenue in the prior year.”
Carl Hess (pictured), WTW’s chief executive officer, said: “As our strong organic revenue growth demonstrates, our strategic initiatives continue to gain traction in the marketplace, highlighting the value of our investments in talent and technology. However, headwinds from prior-year book sales, inflationary conditions and the costs of our investments negatively impacted our margins and earnings this quarter.
“We have reduced our 2024 adjusted operating margin and adjusted EPS targets to account for these short-term trends, as well as our ongoing strategic investments and the unfavourable pension income dynamics we have previously noted. We believe we are well-positioned to resume steady growth in margins, earnings and free cash flow from current levels.”
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