KPMG - Last Big4 to Report, Shows Excellent Growth

KPMG was the last Big Four firm to report its 2007 financial performance this year. Revenue growth was solid across all business lines and geographies. Advisory services and BRIC countries grew the fastest, to put KPMG's 2007 revenue just shy of $20 billion.

Revenues shot up 17.4% to US$19.8 billion for year ending September 30, 2007 against US$16.9 billion in 2006. Correcting for FX, growth was 12.7% in local currency terms.

In terms of business lines:

• Audit revenues increased 13.3% to US$9.39 billion. In 2007 KPMG LLP, the U.S. firm, regained the number 1 position as the auditor for the largest U.S.-based bank audits.
• Advisory services grew the fastest at 22.2% to US$6.43 billion, helped by M&A activity, heightened regulations and demand for performance improvement.
• Tax services increased 20% to $3.99 billion
  

In terms of geographies:

• Asia Pacific region's revenues grew 21.6% to US$2.55 billion with strong growth in Japan and China
• Europe, Middle East and Africa revenues increased 20.9% to US$10.67 billion
• Americas region revenue grew 10.6% to US$6.59 billion, and was the slowest growth region. Latin America was up 24% percent
• BRIC countries (Brazil, Russia, India and China) grew an amazing 41%
  
  In 2007, KPMG had 7,160 Partners up 3.9% from 2006; 92,924 Professionals up 10.6%; and 23,239 Administration personnel up 6.3%. Total personnel of 123,323 increased 9.3%

Now that all the Big4 firms have reported numbers, we will soon publish in our blog:

Big4.com's 2007 Financial Performance Scorecard

Yes Virginia, Deloitte Says Santa Still Holding Steady

Deloitte's 22nd annual survey cuts through typical Big Four stodginess with a refreshing headline:

Yes, Virginia, There is a Santa Claus; Gift Buying is Expected to Hold Steady, Although Consumers Will Spend Less Overall

Here's what Virginia needs to know about the American consumer: While 4 of 10 have intentions to spend less this year than last, they may end up spending almost the same amount. And why do people want to spend less? Lower income households cite higher food and fuel costs as reasons, while those at higher income levels point to volatility in the stock market and declining home values.

Consumers expect to buy an average of 23 gifts, up from 22 last year and the highest in the last six years. Deloitte finds women plan to buy even more, with an average of 26 gifts.

Only 57% of consumers say the economy will improve or remain the same next year. But 85% say they feel secure about their jobs, about the same % as last year.

And now to verify something that everyone is getting more aware each year - Christmas gifts are coming in small packages, including tiny envelopes....

Deloitte finds that for the fourth straight year, gift cards are expected to be the top gift purchase, with more than 69% planning to buy, compared with 66% last year. It appears that Americans are drawn in by their convenience and that it perhaps eliminates the hassle of deciding what to buy, leaving it to the recipient. 16% plan to buy a whopping 10 or more cards - one of each of their family member and an average of $36.25 per card on average compared with $30.22 last year.

On the flip side, 39% would rather get a gift card than merchandise, an increase from last year’s 35%, with resistance to giving gift cards falling from 19% saying they don’t like to give gift cards because they’re too impersonal down from 22% last year).

“Again, convenience is key,” said Deloitte's Janiak. “A gift card to a store that the recipient enjoys is a thoughtful gift that accommodates Americans’ limited time to shop. As gift cards continue to grow in popularity, retailers need to be even more creative in their redemption programs, so that they can quickly recognize the dollars in their revenues and potentially capture additional spend beyond the value of the card. As we approach the holidays, retailers could encourage consumers to redeem their unused gift cards for this year’s gift purchases by offering a dollar amount or percentage off the purchase, free gift wrap, or some other bonus.” According to the survey, nearly half of consumers (49 percent) have at least one partially or completely unused gift card; on average, these consumers have 3.7 unused cards.

Also, with all the recent recalls of toys and concern about lead paint, consumers are increasingly wary of safety of imported products. Almost 38% said they feel food products imported from other countries are not safe, and 35% said the same for non-food products. 58% say the recent news stories about product recalls will influence some of their purchase decisions this holiday season.

OK, the gist of this survey, expect people to throng the registers to buy slim gift cards, buying locally made products and much against their instinct buying a ton of gifts for their near and dear.

Yes Virginia, Santa Claus does exist, but has a much easier time coming down the chimney this year without much of his voluminous gifts.

Here's the full report
www.deloitte.com/us/2007HolidaySurvey.

Grant Thornton Revenue Up 17%

Grant Thornton LLP, the U.S. member firm of Grant Thornton International, reported on October 17th, that its revenues increased 17% to break the bilion dollar level for the fiscal year ending July 31, 2007. Revenues was $1.036 billion

Grant Thornton also said that of its 1,896 new client engagements, 1-in-5 were companies with global operations. But it did not provide much more than this high level info.

Last fiscal year, Grant Thornton LLP reported that revenues climbed 22% to $886 million in the fiscal year that ended July 31, 2006.

So this is a 17% growth on the back of another 22% growth last year, showing that not only Big Four firms, but also the Next Six Firms have also have spectacular revenue growth.

KPMG: The Last Big Four Firm to Report 2007

KPMG is the last Big Four firm to report its results. The other Big Four firms - Ernst and Young, PricewaterhouseCoopers and Deloitte and Touche - have all reported their fiscal 2007 results. And they have all been terrific, all at around 15%, which is quite amazing given that the starting point for revenues is around $20 billion. It is quite hard to grow at these rates for several consecutive years for mega professional service firms.

Which tells us that financial and corporate business worldwide has exploded in the last few years, especially in BRICTIM countries - Brazil, Russia, India, China, Turkey, Indonesia and Mexico, where their growth has been generally in excess of 20%. Keep in mind that these countries had a combined GDP of US$7.4 trillion or about 15% of the total global GDP of $48 trillion, and growing at ~7%.

We will be watching for KPMG's report (due out around December 1, 2007), which we anticipate to be in line with the other three. After that we will create a detailed financial analysis of the Big Four 2007 reported performance.

Ernst and Young: Double Digit Revenue Growth to $21 Billion

Ernst & Young just announced that its global revenues soared to US$21.1 billion for the fiscal year ending 30 June 2007, increasing 15% or US$2.7 billion higher than 2006.

The firm saw double digit performance in each of global service lines and each of the seven geographic Area practices:

• Assurance and Advisory Business Services (AABS) was up 16% due to continued steady demand for assurance and risk-based services, together with the growing call for business advisory services
• Transaction Advisory Services (TAS) was up 29% revenue increase, due to involvement in some of the largest deals over the period, higher emerging market activity, and good demand from Private Equity
• Tax revenue was up 18%, due to strong demand for tax services, particularly in Far East and Americas

In the seven Areas, US dollar growth was also spectacular, especially in developing countries:

• 10% in the Americas
• 22% in Northern Europe, Middle East, India and Africa
• 16% in Central Europe
• 17% in Continental Western Europe
• 27% in the Far East
• 16% in Oceania
• 21% in Japan.
• China, India and Russia — growth in excess of 30%

Excellent performance from E&Y along with all the other Big Four who have reported double digit growth performance. Just shows how strong these firms are, how well they are integrated with the global economy and how they are able to leverage their size for delivered tremendous growth.

With this, Ernst and Young's revenues comes $2 billion behind Deloitte and Touche and $4 billion behind PricewaterhouseCoopers.