MMC’s Q1 profit takes US$478 million hit

***CORRECTION: This news item contains a correction of a news item posted on May 8, 2008.

Marsh & McLennan Companies Inc. (MMC) has reported a US$210 million loss in Q1, a dramatic drop from 2007 Q1’s profit of US$268 million.
“In connection with its assessment of Kroll, MMC tested the related goodwill on its balance sheet,” an MMC statement says. “This resulted in a non-cash goodwill impairment charge of US$425 million in the first quarter. There is no tax effect related to the impairment charge, nor any impact on MMC’s cash flows, tangible equity or debt covenants. As a result of the goodwill impairment charge, MMC reported a first-quarter net loss of US$210 million.”
Marsh’s U.S. and Canada operations posted revenue of US$496 million in 2008 Q1, the same amount as 2007 Q1. Total revenue generated by Marsh grew to US$1.2 billion from 2007 Q1’s US$1.14 billion.
Its Mercer operations also saw revenue growth, from US800 million to US$925 million in the first quarter.
The Kroll operations reported revenue growth, as well, from 2007 Q1’s US$193 million to US$220 million.
“As part of our review of Kroll, we determined that the corporate advisory and restructuring operations should be managed separately; additionally, we recorded a non-cash goodwill impairment charge,” Brian Duperreault, president and CEO of MMC, said in the release. “We continue to evaluate Kroll to identify those businesses that have the greatest growth potential within MMC’s portfolio.”