October 31, 2020

Number of the Day: $9.14 Billion

That is the combined FY 2020 revenues for the Big 4 firms in Australia, an increase of 6.2% over FY 2019.

According to reports from the Australian Financial Review, here’s how each firm fared this past fiscal year:

1. PwC ($2.6 billion)

PwC’s revenues didn’t budge much at all in FY 2020, as its results were SALY. Despite staying flat, P. Dubs is still the largest Big 4 firm in Australia in terms of revenue. But Deloitte is gaining on their ass.

Here’s the breakdown by service line:

  • Assurance (risk advisory and audit): Revenue up 6%
  • Financial advisory (deals, infrastructure and urban renewal, private clients, legal, and tax): Revenue down 2%
  • Consulting: Revenue down 4%

This is the first year since FY 2015 that the firm’s revenues have not grown by at least 10%, according to AFR.

CEO Tom Seymour said he’s confident PwC—especially the firm’s financial advisory business—will be resilient enough to emerge in a stronger position once the COVID-19 pandemic has passed:

Financial advisory is our deals, private clients and tax business. That business was growing pretty well through to February but was probably the most impacted business by COVID,” he said.

“When COVID hit there was so much uncertainty in the market … it created a bit of a pause in the market. We do think deals will come back strongly in the new calendar year.”

PwC posts flat result of $2.6b, limits staff cuts to 250 [AFR]

2. Deloitte ($2.5 billion)

Deloitte’s revenues went up 10% in FY 2020 and it could have been more if it wasn’t for that meddling pandemic:

Partners were told on Monday [June 22] that the firm was on track to deliver revenue growth of about 14 per cent over the first three quarters of the firm’s financial year but that growth had collapsed in the final quarter due to the pandemic.

Revenue in May, the firm’s year-end month, was down 19 per cent compared with May 2019.

While AFR didn’t report revenues by service line, the publication did report on utilization … or lack thereof in most LoS:

In an earlier partner webinar at the end of May, Deloitte chief operating officer Andrew Griffiths reported that the firm’s utilisation of 65 per cent was five percentage points behind planned levels.

Audit and assurance work remained strong, however, with the division working at 77 per cent utilisation.

Financial advisory sat at around 60 per cent utilisation while consulting work sat in the mid-60s. Both were well below behind planned levels.

Deloitte to cut at least 700 roles across the firm [AFR]

3. EY ($2.13 billion)

Of the Australian Four Horsemen, EY had the biggest revenue gains in FY 2020, up 13% over the previous financial year.

AFR reported that advisory revenue was up 20 %, while EY’s assurance business posted an increase of 10%.

According to a press release from EY, the firm states consulting services revenue also increased by 20%, tax (including people advisory services and EY Law) grew by 8%, and strategy and transactions went up 6%.

But don’t expect double-digit revenue growth at EY Australia in FY 2021, CEO Tony Johnson warned:

We’re certainly modifying downwards our growth expectations for FY21,” Mr Johnson said. “It’s going to be a really different year because rather than setting an annual budget, we’ll be somewhat iterative in the way we go about it. So we’ll probably stop every quarter and say, ‘where do we go for the next quarter?’.

“So I think we’ll be less than 10 per cent [revenue growth] this year. Pick a number: 6 or 7 per cent would be our target. The first half will be slower than the second half.”

EY revenue up by 13pc despite COVID-19 [AFR]

4. KPMG ($1.91 billion)

Bringing up the rear is KPMG, but the House of Klynveld’s revenues increased 7% over last fiscal year.

Here’s the breakdown by service line:

  • Audit, assurance and risk consulting: Revenue up 9%
  • Deals, tax, and legal: Revenue up 8.1%
  • Enterprise (middle-market business): Revenue up 5.8%
  • Management consulting: Revenue up 4.6%

CEO Gary Wingrove said the 7% revenue growth figure was lower than the firm’s planned 12% target and he added that he expected “flattish” growth in FY 2021:

I remain positive in terms of this financial year. But we do expect conditions to be pretty difficult from a trading perspective for the first half of [FY21], so through to about Christmas,” Mr Wingrove said.

“Hopefully we’ll get some stability and some growth in the second half but we are expecting revenues for the firm as whole to be ‘flattish’.

“I use that word deliberately because I think it’s too hard to predict an exact number or budget to an exact number. It’s still a pretty volatile environment.

KPMG revenue up 7pc in ‘wholly unusual year’ [AFR]

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