PwC forecasts ‘tough 6 months ahead’ with volatility to drive market, deals

Positive revenue growth in 2021 forecast after stronger than expected growth in the transactions business.

PwC Australia CEO Tom Seymour. Picture: Tara Croser.

PwC is forecasting positive revenue growth in 2021 after stronger than expected growth in its transactions business during July, but chief executive Tom Seymour has forecast a tough six months ahead.

The accounting giant posted annual revenue of $2.6bn in the 12 months to June 30, a result flat on the prior year and dragged down by a 17 per cent decline in revenue during June as the impacts of the COVID-19 pandemic hit hard.

But Mr Seymour said July revenues were down by a better than expected 10 per cent.

“July is probably our strongest month since COVID and is a bit ahead of where we thought it would be. July would give us a bit of confidence (for the future),’’ he told The Australian on Monday.

“Our assurance business is the most predictable revenue in our portfolio. That is continuing. The transaction deals market that really slowed down, is beginning to come back. That is reflecting our clients starting to say, “We can’t sit around and wait for ever.” Over the next year, our deals business we think will be the strongest. Volatility will drive change in the market.”

While the firm’s 2020 results were hit by four months of the COVID-19 driven downturn, Mr Seymour said he expected the year ahead would be a tale of two halves.

“We would like to think we would see positive growth in FY21. The first six months will be below (the results of the prior year) but the second six months will be better. It is the most difficult climate I have ever been in to forecast 12 months ahead. Agility is our prime focus right now,’’ he said.

PwC said last month that it was making 400 staff in its consulting and financial advisory business redundant to offset the downturn in business caused by the pandemic, but only 250 left the business.

The firm earlier instituted a reduced working week program under which the pay and hours of under-utilised staff were cut by at least 20 per cent since mid-April, a 4 per cent annualised reduction.

Mr Seymour said there were no plans for further restructures or redundancies.

“The restructures we have made around our consulting business and operating model were necessary. I am confident they will set us up to be really strong in the future,’’ he said.

“We have tried to plan for a really tough year ahead. We are confident we have built a strong and resilient platform. We are confident we have the right partners and teams to lead. We have planned for a really tough 6 months.”

Morale in the firm has reportedly fallen in the wake of the restructure. In March, Mr Seymour replaced Luke Sayers, who has served as CEO for the past eight years.

But Mr Seymour said: “In relative terms compared to the Australian workforce, morale in the industry and within PwC is pretty high. Everyone has uncertainty their lives at the moment. But we are an amazingly resilient business. The changes we have had to make in the past two months have really set us up to be resilient over the next eight months and grow on the other side.”

He said a prime focus in the year ahead would be about putting technology at the centre of the firm.

“Our changes we have made are about putting technology at the centre of our strategy as opposed to having it as something on the side, doing special tech projects,’’ he said.

That is going to be a really big growth area for our business into the future.”