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KPMG revenue tops $23B on gains in advisory, tax

 

By Sabine Vollmer
December 19, 2012

Fiscal 2012 financial results released by KPMG International suggest that strong demand for advisory and tax services and rapid revenue gains in emerging markets helped the Big Four accounting firm shrug off the effects of the eurozone crisis.

The global network of firms that make up KPMG International reported $23.03 billion in revenue for the fiscal year that ended Sept. 30, up 1.4% from a year earlier. Revenue increased 4.4% not adjusted to U.S. dollar exchange rates.

During the first six months of the fiscal year, revenue increased 6.4%, but the growth rate slowed to 2.1% in the spring and summer as European economies sank into recession.

“Despite the volatility in the global economy this year, KPMG saw growth in every service line, every region, and every industry,” John Veihmeyer, chairman and CEO of KPMG in the U.S. and the Americas, said in a press release.

Overall demand for professional services increased in fiscal 2012, but particularly in financial services, industrial markets, infrastructure, government, and health care. Revenue from advisory services rose 8.3% to $7.86 billion. Tax revenue increased 6.3% to $4.86 billion, and audit revenue was up 0.9% to $10.31 billion, the firm reported.

Emerging market potency

KPMG reported 20% annual revenue growth or more at member firms in Argentina, Brazil, Chile, India, and Turkey for fiscal 2012.

Member firms in Africa and Indonesia reported annual revenue growth of more than 10% in fiscal 2012.

Also, KPMG continued to invest in emerging markets during the past fiscal year, opening an office in Myanmar and establishing member firms in Iraq and Mongolia.

The firm saw its biggest regional revenue gains in the Americas (up 7% year over year), followed by the Europe, Middle East, and Africa region (up 4%). Revenue from the Asia Pacific region inched up 1.1%. 

Audit services, ongoing acquisitions

While audit services still led the service lines by overall revenue, generating 44.8% of the pie, its growth was subdued compared with the advisory and tax lines. The market for audit services “has never been more competitive, and we are focused on continuing to improve audit quality,” said Michael J. Andrew, who assumed KPMG’s global chairmanship last year and is based in Hong Kong.

KPMG has invested more than $150 million in its global audit platform in the past several years, he said.

In addition, KPMG “will continue to make acquisitions that will help build market-leading positions and capabilities in key areas that are important to clients, as we have done in shared services and outsourcing advisory and indirect tax compliance services, as well as in procurement and supply chain management, through our recent acquisition of [the supply chain management business] BrainNet,” Andrew said.

Talent recruitment

KPMG increased its global workforce by more than 5% in fiscal 2012, to more than 152,000 partners and staff. The number of KPMG partners rose by more than 450 to 8,600. Also, KPMG recruited more than 18,000 graduates and will step up hiring to add 60,000 graduates over the next three years.

Sabine Vollmer (svollmer@aicpa.org) is a JofA senior editor.

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