The past year saw a contraction of business for accounting giant PwC in Asia, as scandals led to client loss in China and necessitated the sale of its government consultancy division in Australia. The company reported a slump of 12.7% in Asia-Pacific profits for the fiscal year-end on June 30th, a downturn that counterbalanced growth seen in the Middle East and Europe.
Although globally, PwC witnessed a slight increment of 1% in its annual profits, this marked a decrease from the 3.1% growth experienced in the preceding year. While concrete profit figures have not been divulged, the firm cites a record $55.4 billion revenue for the year up to June, a 3.7% increase when accounting for currency variations. This stands juxtaposed against the 9.9% boost to revenues in 2023.
The firm was damaged in Asia-Pacific due to double scandals coupled with a cooling consultancy market that affected competitors like Deloitte and EY in their most recent financial years. PwC was entangled in the collapse of real estate giant Evergrande, one of its biggest audit clients in China. The company was found guilty of assisting to hide a fraud at Evergrande by Chinese officials. As a consequence, state-run companies withdrew PwC’s auditor services resulting in a six-month suspension of PwC China’s license last month.
In Australia, PwC faced a political backlash as a partner in its tax practice was discovered to have exploited confidential data accrued from his government-related work to attract global tech firms. To prevent the loss of federal contracts, the company sold off its government consultancy wing in Australia.
Following these scandals, changes occurred at the leadership level of PwC’s local businesses in both countries, with global leaders of PwC replacing them. Furthermore, PwC China lost its place on the company’s senior leadership team.
In the annual corporate report from PwC, Global Chair Mohamed Kande stressed the essential role of self-scrutiny and transparency in earning and preserving stakeholder confidence, particularly when mistakes are made. He underscored that the audit of Evergrande, which failed to reflect PwC staff’s quality, was addressed seriously with measures including holding the leadership accountable.
In terms of revenue, PwC experienced a decrease from $10 billion in FY 2023 to $9.3bn, indicating a 5.6 per cent dip in its smallest region, Asia-Pacific. In contrast, revenue in the biggest region, the Americas, rose by 3.4 per cent, with profits likewise increasing by 3.8 per cent.
The company reported outstanding growth in the EMEA region, with particular mention to the Middle East, Sweden and France, leading to an overall rise in revenue by 8.6 per cent and a profit hike of 3.4 per cent.
Notwithstanding the issues in Asia, PwC’s global revenue growth was slightly ahead of Deloitte’s 3.1 per cent, but slightly lagging behind EY’s 3.9 per cent achievement. Both rivals announced their slowest growth rate in 14 year, experiencing stagnation in the Asia-Pacific market, and a deceleration in consulting.
Mr. Kande, who assumed the role of Global Chair in PwC in July, recognised a year of triumphs mingled with challenges. The consulting sector was hampered by a sluggish market for mergers and acquisitions, a slow-growing economy in several crucial markets and political unpredictability that constrained some important investments. As a result, consulting saw a modest growth of 2.6 per cent, contrasting with the audit arm’s 3.4 per cent and tax and legal services’ 6.3 per cent revenue hikes.
© The Financial Times Limited 2024