KPMG growth lags that of Big Four rivals as it posts global revenues

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KPMG has underscored its position as laggard of the Big Four after it posted the slowest growth in global sales among the accountancy and consulting firms during the latest financial year.

The smallest of the Big Four, KPMG brought in revenues of $36.4bn in the 12 months to the end of September, representing local currency growth of 8 per cent.

This lagged Deloitte, EY and PwC, which all reported double-digit revenue growth during their latest financial years, widening the gap between KPMG and its rivals. Deloitte is the largest of the Big Four with revenues of $64.9bn.

KPMG would need to increase its revenues by more than a third to catch EY, the next smallest Big Four firm.

The results come after KPMG faced numerous challenges across several markets during the past year, including scrutiny over its audits at three failed US banks; a governance scandal at its Dubai business; and a record regulatory fine in the UK.

The firm promised to invest $4.2bn by 2026 in a bid to boost performance. It also extended the term of Bill Thomas, the longstanding chair and chief executive of KPMG International, by another year to September 2026, meaning he will serve nine years in the role.

One person briefed on the decision said the extension would allow Thomas to oversee the three-year investment strategy, adding that the firm’s leadership did not want to “rock the boat”.

Another person said the role does not have official term limits but added that the extension was “only for one year” and said Thomas would not “go on and on” in the position.

Like other Big Four firms, KPMG has been forced to contend with a market slowdown as clients pulled back on consulting work amid economic uncertainty, and as dealmaking activity dried up.

Revenue growth at KPMG’s advisory unit slowed to 7 per cent during the year to September, with the division posting sales of $15.9bn. In the previous 12 months, revenues grew 19 per cent at the unit.

Regionally, growth was slowest in Asia Pacific, with revenues rising 4 per cent to $6.1bn.

Growth was strongest in KPMG’s tax and legal services businesses, which increased revenue 10 per cent year-on-year, and which the firm said was likely to remain a bright spot thanks to international efforts to impose a minimum tax rate on multinationals.

“As global tax reform continues at pace, our tax advisory teams are working with clients to positively navigate these changes and we expect significant activity given this reform over the medium term,” KPMG said. Audit revenues climbed 9 per cent to $12.6bn.

KPMG’s results pushed the Big Four firms’ aggregate global revenues in their most recent full financial year to a record $203.8bn, up from $190bn last year.

Thomas said: “As the world faces economic and geopolitical uncertainty and increasing complexity, KPMG has remained focused on harnessing the full breadth of our multidisciplinary model, which has enabled us to deliver sustainable growth across all areas of the business.”

The firm said it would invest $4.2bn by 2026 in people, technology and environmental, social and governance services. Global headcount grew 3 per cent to more than 273,000, despite the total number of KPMG employees in the Americas falling 6 per cent during the financial year.