Aon’s broking profit drops 20% as revenues fall

Aon’s broking division made an operating profit of $691m in the first half of 2015, down 20% on the $862m it made in last year’s first half.

This was caused by revenues falling while expenses remained almost static.

The division, Risk Solutions, suffered a 5% drop in total revenue to $3.7bn (H1 2014: $3.9bn), mainly because of foreign exchange fluctuations.

Organic growth, which excludes the effects of foreign exchange movements and acquisitions, was 2%.

Operating expenses fell slightly to $3bn from $3.1bn

The division’s operating profit margin fell to 18.5% from 21.9%.

Second quarter slump

The picture was similar in the second quarter of 2015 alone. Risk Solutions operating profit fell 33% to $279m (Q2 2014: $417m) as revenue dropped 6% to $1.8bn (Q2 2014: $1.9bn).

The operating profit margin fell to 15.2% from 21.4%.

Organic growth was 2%

‘Solid performance’

As a group, Aon made a profit before tax of $635m in the first half of 2015, down 20% on the £794m it made in last year’s first half.

Revenues fell 4% to $5.7bn (H1 2014: $5.9bn) while operating expenses were static at $4.9bn.

Revenue fell mainly because of foreign exchange losses.

But although the first half was difficult, Aon group chief executive Greg Case was positive about prospects for the remainder of the year.

Case said: “Despite macroeconomic headwinds, we expect solid performance across each of our four key financial metrics for the second half of the year, including significant free cash flow growth, placing us firmly on track towards our goal of delivering $2.3bn or more of free cash flow for the full year 2017.”