KPMG UK’s profit before tax dropped nearly 20 per cent in 2023, the firm reported today, as revenue growth slowed and staff costs increased.
The firm reported a profit before tax of £364m for 2023, down 19 per cent from £449m in 2022.
Revenue grew by nine percent to £2.96bn last year, but this was much lower than the 16 per cent revenue growth the firm saw in 2022.
The firm stated that client demand for advice on tax and AI lifted revenue in the firm’s tax and legal business by eight per cent.
KPMG’s consulting arm recorded a seven per cent increase in sales, while the firm’s audit practice grew 19 per cent, which the firm said was driven by the increasing number of reporting requirements companies face.
However, the wider slowdown in the global deals market saw sales in its deal advisory decrease by six per cent.
Average partner payouts jumped to £786,000, as its 833 equity and salaried partners received £746,000, with an additional £40,000 allocated to their capital account. This figure was up from the £757,000 partners got paid out last year.
But rising staff costs held the firm back, which increased by 17 per cent last year.
KPMG has a three-year strategy to “transform the firm for future growth”. The firm has hired 2,573 new people, promoted 1,945 employees, and had around 1,400 graduates and apprentices join over the last year.
The firm is also investing heavily in AI and tech as KPMG and Microsoft expanded their cloud and AI alliance last July.
Commenting on the results, KPMG UK chief executive Jon Holt said: “Our people have worked exceptionally hard to deliver strong revenue growth against a challenging economic backdrop. Digitisation and emerging technologies are at the forefront of our clients’ minds, and we have the expertise to meet demand and help them gain a competitive edge.
“I am confident that our long-term strategy is delivering and putting the right foundations in place to transform the business for future, sustainable growth.”
It was revealed in December that KPMG UK had begun exploratory discussions with its partners over a plan to merge its business with KPMG Switzerland. If it gets the green light, the units workforce will grow to over 18,000 as Switzerland has over 2,600 people.
Commenting on the potential merger today, Holt added: “Bringing together our two firms would give us more collective power to invest, build new services for our clients and provide our people with significant global career opportunities. Together, we would grow faster, be more profitable and do so in a sustainable way.”