KPMG Australia total revenue falls 4pc as it pivots to technology and transformation demand
The accounting firm has slashed partner pay following a slide in revenue driven by weaker demand from government and financial services, as it pivots to a greater focus on technology.
Audit and consulting giant KPMG Australia has slashed partner pay following a slowdown in professional services spending as it targets greater demand for technology and transformation services in the new financial year.
KPMG Australia chief executive Andrew Yates said the firm’s new business plan would provide a platform for sustainable growth by aligning investment globally, anticipating future client needs, and creating an environment to innovate.
The restructure first announced in June saw about 200 workers made redundant in its consulting practice amid an $80m cost cutting program that puts a greater emphasis on technology and transformation.
A slowdown in the economy resulted in a 3.9 per cent decline in total revenue to $2.39bn in the 12 months to June, driven by inflation and weaker demand for consulting services from government and financial services.
KPMG, however, saw growth for its services from the mining, energy and property sectors.
In response to the profit squeeze the average partner income was down 9 per cent to about $650,000. KPMG said $425m in taxes were paid by the firm and its 691 partners in the past financial year.
Mr Yates was pleased with the result, saying it demonstrated the strength and resilience of a multidisciplinary firm that could pivot and adapt during an economic slowdown and from weaker demand for consulting services led by governments.
“That multidisciplinary model has seen parts of our firm perform differently during the cycle and balance each other out. While our consulting business has had a difficult year, other parts of our firm have formed strongly,” he said.
“Our middle market business grew 13 per cent and that emphasises the importance and the significance and the resilience of mid-tier and smaller businesses at the moment.”
Revenue for the firm’s consulting business was down by 14 per cent for the year, which offset a 13 per cent bump in its mid-market Enterprise business and a 9 per cent income increase in its audit and assurance practice following several landmark audit wins including Westpac, Dexus and Iluka.
Income from the firm’s deal advisory and infrastructure business was flat.
KPMG was also the first major consulting firm to have its key financial metric independently assured having recruited Grant Thornton Australia to assure revenue and taxes paid by the firm and partners, as well as key people metrics.
The firm plans to invest more than $80m on AI and technology platforms in the 2025 financial year, including the launch of its AI Eclipse Learning Academy to upskill our people and further development of its in-house AI platform, KymChat.
Mr Yates said a greater emphasis on technology and transformation in its consulting practice would underpin growth across the business, adding more businesses were seeking to engage it services to understand and take advantage of AI.
“We see AI central to the way we’re thinking about the future of the organisation,” he said.
“We’re seeing an increase in demand for our clients to help them understand what AI is going to do for their business, to help them with technology transformation. So, it’s double pronged. It’s about us being a modern firm, but also about us meeting the market demand, a lot of which has shifted towards technology and artificial intelligence.”
KPMG said it has developed deeper alliances and enhanced collaboration with Microsoft in Australia as part of a $US12bn global commitment to reshape professional services across business-critical areas. This has led to the creation of KymChat, which uses the Microsoft Azure OpenAI platform.
Mr Yates said clients are engaging KPMG to understand how it built KymChat and the processes it went through but noted that there was a pivot away from businesses wanting to engage with professional services from typical assessment and advice services into technology transformation.
He also saw that demand for ESG would increase as the regulatory frameworks continue to expand and evolve.
KPMG is the third of the big four consulting firms to have reported results from the past financial year with PwC Australia the only one left to disclose earnings. Deloitte last month reported a 2.4 per cent decrease in total revenue and EY Australia this week said revenue fell 5.5 per cent to $2.81bn.
In the last fiscal year, KPMG appointed 54 new partners to the firm to take the total headcount to 691, while the percentage of women in partnership increased by 1.2 per cent to 36.3 per cent. The total headcount at the practice was 9602 at the end of the financial year.
The firm increased its Internal Price on Carbon to $45 per tonne to help further disincentive air travel and reduce Scope 3 emissions. It grew the proportion of Australian Carbon Credit Units in its portfolio to 35 per cent from 8 per cent last year,
The firm remains on track to achieve its target of procuring 100 per cent offsets from the countries it operates in (Australia, Fiji and PNG) by 2030.
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