EY Australia targets further growth after demand pushes revenue up to record $2.97bn

An uptick in spending on consultants has helped EY book a record year as it positions itself for further growth despite the threat of a slowdown.

EY Australia is cautiously optimistic about the outlook for the professional services space and is targeting further growth in the year ahead, after booking record revenue last financial year amid increased scrutiny of the sector following the PwC tax scandal.

In its full-year results to June 30, released on Thursday, EY revealed a 13 per cent jump in revenue to $2.97bn as a mix of acquisitions and demand across all business units buoyed the major professional services firm.

Profit, while undisclosed, was up 5.4 per cent across all EY Oceania firms, largely driven by the consulting division, which saw revenue climb 13 per cent to $1.1bn

Revenue exceeded the $2.55bn reported last week by KPMG and $2.85bn by Deloitte in July.

EY regional managing partner and chief executive for Oceania David Larocca said uplift in revenue was outstanding given the complexity of the challenges that the firm and industry faced in the past 12 months.

“It has absolutely been a challenging year for EY and the profession from the tragic events of last year in our Sydney office to the increased security the industry has faced as a result of actions by one of our competitors,” he said.

“Against the backdrop of this, revenue growth of 13 per cent is an outstanding achievement, particularly the quality of growth we saw.”

All service lines of EY Australia delivered double-digit growth to revenue compared to 2022. The Strategy and Transactions practice achieved 16 per cent year-on-year growth, Consulting 13 per cent, Tax and Law 12 per cent and Assurance 11 per cent.

Increased demand for EY’s consulting services came as the Albanese government has pledged to cut back on the use of consultants as it looks to shave hundreds of millions off spending on external advice. This will include a new consulting team of 38 consultants housed inside the Australian Public Service.

EY Australia saw strong growth across all sectors of the business. Picture: Chris Pavlich.

Mr Larocca reaffirmed EY’s support for its government consulting arm and backed the plans to get taxpayers better value for money.

“We are committed to our government practice and confidence about the unique support we provide to public sector. We are absolutely supportive of the government continuing to look for value for money not just from consultants but to ensure there is knowledge transferred,” he said.

In the past financial year, EY Australia appointed 81 new partners, including 50 promotions to partner and 31 new partners hired. A record 46 per cent of newly promoted partners were women, an increase of six per cent on the previous year.

Mr Larocca said EY’s focus had been on positioning the business for long-term success, investing in staff and improving culture following the independent review by Elizabeth Broderick that highlighted bullying, harrassment and racism.

“We invested more than $45m in our talent agenda in FY23. We have also focused on striking the right balance between firm profits and continuing to invest in our business and appropriately rewarding all our people.”

The investment in staff and taking further steps to improve the firm is likely to result in partner income coming in lower than last year. Mr Larocca said that final partner income was still to be determined.

With Australia braced for slower economic growth over the coming 12 months as businesses and households pull back on spending as a result of pressures from interest rates and inflation, Mr Larocca said this was likely to see demand somewhat softer for EY.

“We are cautiously optimistic and are planning for growth in fiscal year 24,” he said. “From a market perspective there is definitely some headwinds and it is different degrees of uncertainty that we have seen for the past for three to four years.

“At the moment we are seeing reduced demand in sectors and also seeing increased demand elsewhere.”

The professional services sector has come under mounting pressure this year since the PwC tax scandal after a consultant shared confidential government information with colleagues in PwC’s tax advisory arm.

The fallout has so far seen PwC forced to sell its government arm, now known as Scyne Advisory, for $1 to Allegro Funds, and sparked a number of parliamentary inquires that could see tough regulation for the sector.

“What has happened in the past 12 months will shape and define EY and also the industry and as a result we will be stronger for it in the future,” Mr Larocca said.

“We are very supportive of more regulation in our sector. It is important that reform in relation to our sector is considered and evidence-based, and addresses a clear problem, and that seems to be view that Treasury is taking and we look forward to contributing to this process.”

EY has pledged in 2023-24 to be more transparent around its culture and the experiences of people. Mr Larocca said that later this year it would release its Value Realised Scorecard for FY23 to in a bid to promote a balanced workplace.