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KPMG Revenues Up 1.4%, But Far Short of Other Three, What Gives?

KPMG yesterday announced combined revenues of US$23.03 billion for the fiscal year ending 30 September 2012, up 4.4% from 2011 in local currency terms and 1.4% in US dollars terms (reflecting the relative strength of the US dollar). Michael J. Andrew, Chairman of KPMG International noted, very interestingly, that 2012 was a year of two distinct halves; with growth strongest at 6.4% in the first six months of the year and relatively weaker growth of 2.1% in the six months to September.

Financial Services, Industrial Markets and Infrastructure, Government and Healthcare were strong. Advisory revenues grew by 8.3%, to $7.86 billion; Tax revenues grew by 6.3%, to $4.86 billion; and Audit revenues grew by 0.9%, to $10.31 billion.

Americas had robust revenue growth, up 7%. The Europe, Middle East and Africa up 4% and Asia Pacific region up 1.1%. Revenue was up 20%+ in Argentina, Brazil, Chile, India and Turkey; and up 10%+ in Africa and Indonesia. KPMG China was converted from a joint venture to a special general partnership, now with 9,000 partners and staff.

In 2012, KPMG increased its global workforce by over 5%, to more than 152,000 partners and staff, the highest number of individuals ever employed across the network, with 450 new partners bringing the number of partners across the network to more than 8,600, another record. KPMG recruited more than 18,000 graduates last year and plans to recruit a further 60,000 graduates over the next three years, marking the highest planned recruitment levels in KPMG’s history.

COMPARE THIS TO THE STELLAR 2012 GROWTH FROM THE OTHER THREE HUGE ACCOUNTING FIRMS IN US DOLLAR TERMS:
E&Y revenues up 6.7%
Deloitte revenues up 8.6%
PwC revenues up 8.0%

Compared to these super rates, KPMG’s 1.4% growth in US dollar terms seems relatively flat. And that belies our expectation that KPMG, being the smallest of the Big Four firms, and having a year-end of September 30, 2012 (three months later than the others) would benefit from the global recovery. So something does not seem right with KPMG’s results, given that the general economic conditions and footprints are similar for all global firms.
We will soon be preparing our recognized Big Four Firms Performance Analysis for 2012, and take a deeper dive into the numbers. But moderate performance from Advisory and Asia was just not on the cards.

Also, this opens up the gap between KPMG and E&Y, which seemed to be really closing over these past few years.

And perhaps, KPMG leadership will enlighten us with more insights into their results. So stay tuned.

Ernst & Young today announced combined global revenues of US$24.4 billion for the financial year ended 30 June 2012, compared with US$22.9 billion in 2011. Revenues grew 7.6% in local currency (US$ 6.7%).
Good growth across all service lines
Emerging markets saw combined revenue growth of 15.5%
Headcount at an all-time high of 167,000
Our business model and strategy continue to weather the economic turmoil and withstand the test of time. All of our service lines showed growth. Assurance revenues were up 4.1%, Tax 7.0%, Transactions 9.4% and Advisory 16.2%, a good performance given the current business climate. Growth in all of our service lines was almost entirely organic, with acquisitions accounting for less than one half of one percentage point.

New York, 19 September 2012 – Deloitte Touche Tohmatsu Limited (DTTL) today announced aggregate member firm revenues of US$31.3 billion for the fiscal year ending 31 May 2012, marking the network’s highest revenue ever. Aggregate revenues grew 8.6 percent in U.S. dollars and 8.3 percent in local currency—the strongest revenue increase since 2008. Deloitte member firms experienced growth across all three major geographic regions, led by exceptional results generated in Asia Pacific, the Americas, and a number of developing markets, as well as across all business lines and industry sectors.
PwC, the world’s leading professional services network, reported record total gross revenues for the fiscal year ended 30 June 2012 of US$31.5 billion. At constant exchange rates, PwC’s total global revenues rose by 8%.

PwC firms reported particularly strong revenue increases of 13% in both North America and South America. This sustained growth follows a similarly strong performance last year and consolidates PwC’s market position in the region.
Revenue growth in developing markets of the Middle East and Africa was also strong – up 15% – reflecting the commitment and increased investment in the region by the PwC network. PwC firms in Asia continued to grow well with FY 2012 revenues up 8%.

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