Crisis bites into KPMG's profits

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The Independent Online

The professional services firm KPMG saw its profits fall as the financial crisis threw the economy off course, though its restructuring practice swelled as struggling companies queued up for advice.

Profits per partner in the UK fell to £671,000 in the year to the end of September, compared with £685,000 in 2008. In 2007, the year before the crisis struck, KPMG's UK partners made £806,000 in profits, or 16.7 per cent more than in 2009. The firm earned £1.6bn in UK revenues, down 1.6 per cent on 2008, with £382m in operating profits, down 1.3 per cent.

Its rival PricewaterhouseCoopers, on the other hand, reported £2.25bn in turnover for the year to the end of June, while Deloitte earned £1.97bn in gross revenues in the 12 months to the end of May.

KPMG's restructuring practice grew by more than 44 per cent to £160m in revenues, compared with £111m in 2008, as companies buckled in the face of the crisis. Among last year's highlights was KPMG's work on the JJB Sports creditors' voluntary arrangement, and on the Dunfermline Building Society administration. The firm also acted on the Coffee Republic administration.

The UK audit practice also had a good year, growing by 4.7 per cent to £486m. Advisory was 0.4 per cent ahead on 2008, but the tax practice slumped by 12 per cent to £375m in 2009. Predictably, the transactions practice was also weak, with revenues declining to £253m, down almost 22 per cent, as deal activity dried up.

Overall, KPMG Europe reported €3.5bn in revenues for 2009. Looking ahead, Rolf Nonnenmacher and John Griffith-Jones, the joint chairmen of KPMG Europe, said 2010 was set to be "another challenging year, though there were encouraging signs of economic recovery".

"After two tough economic years, we are hopeful that the economies in which we operate will provide a more favourable environment," they added.