Accounting and consulting giant KPMG has realised revenues of $24.44 billion for its latest fiscal year, booking an 8% increase in local currency terms, up from 6% in the previous year. Advisory was the strongest grower, while from a regional perspective the Americas outpaced the other continents.
With a workforce of almost 174,000 partners and staff, KPMG is one of the four largest accounting and consulting networks globally. Over the past year the Big Four has seen its global fee income rise by 8.1%, with all business units providing a significant contribution*. Audit revenue increased by 6.1% to $10.03 billion, achieved against the backdrop of an increasingly challenging market for audit and assurance services, says John Veihmeyer, Chairman of KPMG International. “The audit market has never been more competitive, and we are seeing an increasingly dynamic market, with more frequent tenders,” adding that KPMG has launched a significant multi-year investment in audit services to boost quality and remain ahead of the game.
Advisory, the firm’s growth engine over the past years, saw it revenue grow by 9.2% to $9.10 billion, building upon 10% growth in FY14. Key drivers include strong demand for operations improvement, technology advisory and customer excellence, three practice areas that sit within KPMG Management Consulting. Other practice areas that booked marked growth are Risk Consulting, IT Advisory Services, Forensics, and Corporate Finance. Advisory today represents 37% of total revenues, compared to 30% in 2009, when the professional services giant booked a global income of $20.1 billion.
Tax revenues grew by 9.9% to $5.31 billion, up from 6.1% growth in FY14, driven by an increased demand for tax compliance and tax advisory services in all three of the firm’s regions.
Americas was the best performing region, with revenues rising by 13.6%, driven by very strong growth in each of the three businesses: 15.2% growth in Advisory revenues, a 14.5% increase in Tax and an 11.8% increase in Audit revenues. Europe, Middle East and Africa region (EMA, including India) revenues grew by 4.0%, down slightly from the 4.7% growth recorded in fiscal year 2014, reflecting the continued economic challenges faced by some countries in the region. Strongest growth within Europe came from Germany (+7.8%) and Spain (+9.6%).
In Asia Pacific, revenues grew 8%, with Australian revenues increasing by 10.6%, China by 8.5%, Japan by 6.8% and Singapore by 11.2%.
Mergers & acquisitions
Similar to the other Big Four, KPMG has been highly active in the M&A space, completing 29 transactions in FY15, a record says Veihmeyer. Globally, KPMG for instance acquired the Human Resources Service Delivery (HRSD) practice from Towers Watson, in Australia it bought Banarra – a Sydney based human rights and social impact company – and in the US it purchased healthcare consultancy Beacon Partners. In particular in the UK the company has been active, with a focus on management consulting, acquiring High-Point Rendel (35 consultants specialised in infrastructure projects), Boxwood (55 consultants), and Nunwood (80 advisors). The addition of Crimsonwing, a specialist in the field of Microsoft Dynamics, in a deal worth roughly £20 million, saw KPMG create a new venture in Europe – KPMG Crimsonwing – which consists of nearly 350 employees in the UK, Netherlands and Malta.
The growth has sparked a record class of newly-promoted KPMG Partners, 643 in total, including 352 new external hire partners. Across the board, KPMG's global workforce grew by more than 7% to almost 174,000 partners and staff, the highest number of individuals ever employed across the network.
“This has been an exciting year for KPMG, as we have continued to innovate and invest at a record pace to meet rapidly changing global business demands. The breadth of services offered to clients has expanded considerably, with significant investment in new technologies such as real-time data analytics, a record number of acquisitions, and bringing on board thousands of new, highly talented professionals,” comments Veihmeyer.
Big Four comparison
Compared with the other Big Four, KPMG lags EY – which saw its global revenue jumps 11% to $28.7 billion – by 17%, while PwC and Deloitte, which this year switched positions as PwC slightly outpaced its rival, both enjoy a fee income that is roughly $11 billion higher. When it comes to consulting, Deloitte is the clear leader, in terms of Audit and Tax, PwC leads the pack.
* Fee income growth is measured in local currencies. Measured in US dollars, total fee income dropped by 1.5% from $24.8 billion last fiscal year, due to the effect of the high value of US dollar.