Adverse FX movements drag down profits at Willis

Unfavourable foreign exchange movements dented profits at broker Willis in the first quarter of 2015.

Its profits fell to $210 million in the first quarter of 2015, compared with $246 million in the prior year quarter, driven by restructuring costs and adverse foreign currency movements.

However, Willis’ organic commissions and fees, which exclude both the impact of foreign currency movements and the net impact of acquisitions and disposals, grew 3.4 percent, driven by solid growth in Willis North America and Willis International.

Foreign exchange movements impacted commissions and fees by $69 million and a $25 million period-over-period net increase from acquisitions and disposals completed in the past 12 months.

Willis North America posted a 4.7 percent growth in organic commissions and fees, led by strong growth from the mergers and acquisitions, FINEX and real estate/hospitality practices and mid-single digit growth in the human capital practice.

Its international practice posted a 5.3 percent increase in organic commissions and fees in the first quarter 2015 compared with the same period in 2014. This was primarily driven by strong growth in Latin America where Brazil and Colombia showed double digit growth.

In addition, high single digit growth in Asia driven by good growth in global wealth solutions and marine specialty business and mid-single digit growth in Eastern Europe contributed.

Dominic Casserley, Willis Group chief executive officer, said: “The first quarter was a solid start to the year that demonstrates continued progress against our strategic goals. Most importantly, in market conditions that are best described as uneven, we achieved good underlying commissions and fees growth driven by organic growth across all of our segments and solid contributions from our 2014 acquisitions.

“In addition, we have maintained our focus on our cost management initiatives as well as achieving savings from our operational improvement programme. As a result, we managed our spread between organic commissions and fees growth and organic expense growth to positive 170 basis points. Overall, we’ve started the year with very good momentum towards our 2015 goal to achieve a positive 130 basis point spread organically.

“While we expect market conditions in certain parts of our business to remain challenging throughout 2015, we believe the combination of Willis’s market and geographic diversity, our client propositions, and the continued execution of our cost initiatives, should allow us to achieve our organic growth goals for the year.

“Additionally, momentum from our focused acquisition strategy will be more evident in future quarters, with the expected closing of the Miller transaction in mid-2015 and the recent announcement of our firm offer to acquire the share of Gras Savoye that Willis doesn’t currently own at the end of the year, both subject to regulatory approval. Overall, we are well positioned to build shareholder value as the year goes on.”