KPMG has reported that its UK profits fell by 13% last year, blaming an economic recovery that “failed to materialise”
The accounting giant has reported a 4% increase in UK revenues to £1,774m in the year to 30 September 2012, led by a 12% growth in management consulting to £286m and an 11% boost to the risk consulting revenues to £250m.
Revenues in the tax practice line fell by 3% on the year to £380m, and audit revenues increased by 3% to £469m.
KPMG says that it had “maintained staff levels in some areas of the business in anticipation of wider economic recovery” adding that “once it became clear that recovery remained more distant, we had to implement a number of job losses,” resulting in high “one-off costs”.
Simon Collins, UK senior partner at KPMG, admitted the year had been “challenging” but that there are signes that market conditions were improving slowly.
“We were pleased to grow revenues, and some parts of our business such as risk consulting and management consulting have seen double digit growth,” he said. “We continue to invest in these areas and in helping our clients prepare for growth. Our profitability fell because of investment and because we maintained high staff levels in some areas of our business in anticipation of a wider economic recovery that failed to materialise.
"Having put in place a number of measures to reshape our business, I am confident that the right foundations are in place for 2013.”
The UK firm, which has just finished a restructuring process which made 275 members of staff redundant, grew its number of partners through the year to 602 .
Profits were also down across Europe by 5% to €861m, down from €903m in 2012, This was despite combined turnover growing by 4% in the year on a like-for-like basis, taking revenues to €5,198m.
Risk consulting saw the highest level of growth across Europe for the firm, at 16%.
Audit and tax lines remained subdued across Europe, with KPMG saying conditions “continued to be tough.” Audit net sales were flat at 2011 levels, and tax grew by 2% on the year.
Rolf Nonnenmacher, chairman of KPMG in Europe, said “The downturn in Europe has become a long and lingering one and the environment is difficult for companies across sectors. In such times, it is vital that we focus relentlessly on providing our clients with the services they really need, to help them follow their change strategies and achieve sustainable growth. If we continue to do this, we can look to the future with confidence.
“Meanwhile, the debate over the future of audit continues in the wake of the financial crisis. The direction of that debate, particularly in Europe, is a cause of major concern. We are not against change, nor are we interested in special pleading. But EC reforms could end up having the unintended consequence of weakening rather than strengthening standards – the last thing we need at a time when investor sentiment is so volatile. Any reform to the audit regime in Europe must be done with the very greatest of care.”
Jaap van Everdingen, chief operating officer, said, "the world is entirely different to the one that existed before the financial crash."
Last week the firm reported global revenues of $23.03bn in the year, led by an 8.3% total increase in advisory revenues.
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