Summary
Marsh & McLennan Companies (MMC) reported a net loss of $210 million, or $0.40 per share, for the first quarter of 2008, a significant decline from a net income of $268 million, or $0.49 per share, in the prior year. This downturn was largely driven by a substantial $425 million goodwill impairment charge within the Risk Consulting & Technology segment, which negatively impacted operating income. Excluding this charge, operating income decreased by 11% year-over-year, primarily due to weaker performance in the Risk and Insurance Services segment and increased corporate expenses. Despite the overall loss, the company's revenue grew 8% to $3.05 billion, with underlying revenue up 2%, showing resilience in its core operations. The Consulting segment performed well with a 15% revenue increase. However, the significant goodwill impairment, coupled with ongoing litigation and regulatory matters, presents a key concern for investors regarding the long-term value and stability of the Risk Consulting & Technology segment.
Key Highlights
- 1Reported a net loss of $210 million ($0.40/share) for Q1 2008, down from a net income of $268 million ($0.49/share) in Q1 2007.
- 2Recorded a significant $425 million goodwill impairment charge in the Risk Consulting & Technology segment.
- 3Consolidated revenue increased 8% to $3.05 billion, with underlying revenue growth of 2%.
- 4Consulting segment revenue grew 15%, driven by strong performance in Mercer and Oliver Wyman.
- 5Risk and Insurance Services segment revenue grew 2%, but underlying revenue decreased by 4%.
- 6Operating expenses increased 29% due to the goodwill impairment charge and higher underlying costs.
- 7Cash flow from operations was negative at ($463 million) for the quarter, impacted by typical seasonal payments.