PwC, the accounting and consulting firm raked in record revenues of $53.1 billion globally in the year to June 30, representing local currency growth of 11.8%, excluding the impact of the April 2022 sale of its immigration advisory business and its exit from Russia.
The revenue growth, however, lagged behind two of its Big Four rivals; Deloitte and EY (Ernst and Young) in its latest financial year, according to newly published figures.
PwC global chair, Bob Moritz said the firm was in the middle of a period of investment that would pay off in future years, including a three-year hiring spree that will have added 100,000 people to the payroll by the middle of 2024.
- “It has also been affected by losing big audit clients as a result of mandatory auditor rotation outside the US and has yet to boost consulting work for those clients to compensate,” he said.
According to Financial Times, like other Big Four firms, PwC’s business slowed in the most recent financial year, from revenue growth of 13.4%
In the previous 12 months. Clients have pulled back on consulting work amid economic uncertainty, and a drought of merger and acquisition activity has hit deal advisory work.
Advisory business
Revenues in the advisory business were $22.6 billion, up 13% but a sharp deceleration from a 23.5% cent rise the previous year.
Audit revenues increased by 8.9% to $18.7 billion, while the tax and legal services practice was up 12.5% to $11.8 billion.
- “It’s not about top-line growth, it’s about sustainable growth, and it is going to be important to get the pay-off from that investment,” Moritz said.
Moritz is set to retire as global chair at the end of his second term next June.
The race to succeed him was thrown open earlier this month when Tim Ryan, his successor as head of PwC’s US business, decided to pull out of the running.
A decision is expected around the end of the year.
Inflation
PwC does not report global profit figures, but Moritz said that margins had been squeezed by inflation, including increases in staff pay, and by investment in new areas such as artificial intelligence and the completion of 17 acquisitions.
- “Capital for such investments has come from the sale of the mobility business last year and, before that, the disposal of its US government consulting business.
- The pressure on profits is set to continue in the current financial year, he said, because of a tougher economic environment.
- Clients are taking longer to sign deals and opting for piecemeal contracts rather than committing to long-term projects. “Everybody’s expecting more for less and people want more optionality,” he said.
Staff expansion
PwC is nonetheless continuing to expand its staff, which numbered 364,000 at the end of June. It said it would take the total to 400,000 by the end of the current financial year, hitting a target of 100,000 net new jobs globally two years earlier.
Moritz said the pace of hiring had been fastest in the Americas and Asia in the past year but would shift to Europe as new climate regulations go into force, driving demand for audits of environmental data and consulting work for the companies affected.
