UK a blight on Willis’s improved first quarter

Willis made a net profit of $225m (£139m) in the first quarter of 2012, but its UK business continued to struggle in the tough economic climate.

The company has also withdrawn the expected future profit guidance it previously provided and will not provide it going forward because of economic and operational uncertainty. “With that kind of uncertainty, it does not make sense to offer guidance on future financial results,” Willis chief executive Joe Plumeri said.

The broker said its international business achieved 4% organic growth in commissions and fees thanks to increases in all regions except the UK and Australasia.

“In Europe, the continental business grew low single-digits while the UK business was down mid single-digits, as the region continues to suffer from economic weakness, Willis said.

The group-wide $225m profit is a sharp increase from the $35m it made in the same period of 2011. However, 2011’s first quarter result was dragged down by a number of one-off charges, including a $97m bill for the 2011 operational review, and a $171m charge related to early repurchase and redemption of some of its bonds.

Excluding exceptional charges, Willis’s first quarter profit was up 4% to $233m (Q1 2011: 224m).

Commissions and fees increased 1% to $1bn (Q1 2011: $999m). Organic commissions and fees growth was 2% after stripping out  a 1% negative foreign currency impact.

The results were achieved despite continuing troubles at its Loan Protector division in the US, which cut group-wide organic growth by 1%.

“The results we are posting today are encouraging and are the result of significant effort across all segments of the company,” Plumeri said in a statement. “We have seen, however, that unexpected events, such as Loan Protector’s decline and operational or economic disruptions can significantly affect our business results. With that kind of uncertainty, it does not make sense to offer guidance on future financial results. We are therefore withdrawing the guidance we offered previously and will not provide it going forward.”

Willis’s sound first quarter 2012 performance follows a poor full-year 2011 result. Profit halved to $219m (2010: $455m) amid slow organic growth and one-off operational charges.