KPMG grows during Covid and breaks through $2 billion barrier
Increased business confidence has seen KPMG Australia break the $2 billion barrier for the first time, with the firm recording strong – and better than expected – growth over the 2021 financial year.
The accounting and consulting firm has narrowly cracked the $2 billion revenue mark, on the back of five years of back-to-back growth. Last year, the firm booked a 7 percent rise in its financials.
“Considering the ongoing economic and human impacts of Covid-19 during the financial year, this was a remarkably strong performance,” said KPMG Australia CEO Andrew Yates, who succeeded Gary Wingrove at the beginning of last month. “This allows us to further invest in our people as we seek to sustain and grow our business. It’s a testament to our decision to focus on delivering for clients despite all the challenges of the past 12 months.”
Over the past weeks, three of the Big Four have released their results in the Covid-19-hit 2020/21 financial year. Ernst & Young managed to grow its revenues by 9 percent, while Deloitte recorded a 7 percent contraction over the past year, meaning that the the Big Four in Australia are now increasingly bunched.
KPMG’s strong results were led by its management consulting division, which rose by 12.5 percent to bring in close to $630 million. With year-on-year growth of 6.5 percent, Audit, Assurance & Risk Consulting line was the next biggest contributor, bringing in $590 million, while the Deals, Tax & Legal department delivered close to $450 million in revenues despite a small contraction. The last of its major lines – Enterprise – grew modestly to $243 million.
The firm attributed its management consulting growth to increased confidence among its clients toward long-term projects. “In the second half of the year, we benefited from a significant pickup in business confidence across the Australian economy and fortunately we were well positioned to capitalise on the increased activity in the market,” said Yates. “We are seeing much more confidence from clients than a year ago, and I share that optimism.”
With expenses such as travel down, profitability at the firm rose by a staggering 19 percent – which will equate to a 17 percent increase in annual partner profits (after a drop of 12 percent last year) and a doubling of the staff bonus pool above the original budget. The detailing of the partnership earnings at the privately-held firm forms part of KPMG’s efforts to enhance transparency, with this year’s financial results the first to be tabled in a new annual ‘Impact Report’.
“As community and market expectations evolve, people quite rightly want to know more about the organisations they are working with,” said KPMG chairman Alison Kitchen, who recently oversaw a scrapping of the firm’s contentious early retirement policy. “We believe that transparency helps clients, our people and partners, and other stakeholders better understand our values and priorities, laying the foundations for long-term, mutually beneficial relationships.”
The 74-page Impact Report closely details KPMG’s performance in a number of ESG areas, including climate and diversity, with the firm’s almost 10,000-strong headcount evenly split by gender and women now accounting for 31 percent of its 600-odd partners (with a renewed target of 40 percent by 2025).
Former consulting head Ian Hancock’s recent move to a global role, succeeded by Christa Gordon, has also tilted KPMG’s national executive committee to majority female.
