ACCOUNTANCY giant PwC has seen revenues inch up 1.5 per cent in the past year, as booming demand from the emerging markets offset a slowdown in corporate activity and margin pressure from an aggressively competitive pricing environment.
PwC will announce this morning that gross revenues hit $26.6bn (£16.8bn) across its global business in the year to June, a slight increase on last year at constant exchange rates.
Senior partner Ian Powell said conditions had been pretty tough in the group’s more developed markets, but added that PwC capitalised over the year on its programme of investing in its emerging markets businesses.
The Australasia and Pacific arm grew revenues by almost 10 per cent over the year to $1.29bn, while Southern and Central America grew 11.3 per cent to $780m and the Middle East and Africa region by nearly 17 per cent to $820m.
Powell said PwC expects China to contribute as much as the UK to its revenue pool within the next five years, while the Middle East practice is set to double in size in just two years.
Across the globe, PwC’s assurance services division, which accounts for roughly half of all its revenues, saw turnover fall 1.3 per cent over the year due to the competitive pricing environment, as the world’s biggest auditors scramble to land large contracts from firms ever more conscious of their costs in the post-recession era.
“The pricing of audits has become ferociously competitive on a global basis,” Powell said. “Pricing pressure makes a material impact on a firm of our size, and it means we need to invest more and more in other areas such as consulting and advisory.”
The consulting and advisory arm of the business grew by 9.4 per cent over the year to contribute $6.2bn to PwC’s balance sheet. However, this was offset by PwC’s third principle revenue stream, tax services, which saw revenues fall 2.9 per cent to $7.1bn over the year due to the slowdown in corporate dealmaking activity and restructurings.
“The general mood across the world is that the transaction climate is improving, but we are still cautious as it is relatively fragile,” said Powell.