PwC global revenues inch up 3% to $43B, but are hit by COVID
Big Four firm PricewaterhouseCoopers saw its global revenue grow in the first nine months of the fiscal year ending June 30, 2020, but the final three months showed a slowdown due to the impact of the novel coronavirus on clients and the broader economy.
Nevertheless, PwC was able to report revenue growth of 3 percent (in terms of local currency, or 1.4 percent in terms of U.S. dollars) for the fiscal year, reaching $43 billion.
However, during the first nine months of the fiscal year, until the end of March, revenues grew at a faster pace, nearly 7 percent over the same period last year, with increases across all lines of business and in every major market, PwC reported last week. However, from April until June, revenues took a big hit from the lockdown and the economic slowdown around the world from the pandemic. Compared to the same three months last year, revenues were down 6 percent from April to June 2020.
“First and foremost, the COVID-19 pandemic has been a human tragedy that has deeply affected the lives of many people around the world including members of our PwC family, their relatives and friends and our heartfelt condolences go out to all those who have lost loved ones,” said PwC global chairman Bob Moritz in a statement. “Since the pandemic struck, our priorities have been the safety and wellbeing of our people, protecting and preserving jobs, and helping our clients and the communities in which we live and work deal with the impact of COVID-19.”
He noted that PwC has refocused its business in recent months to help clients manage the impact of the pandemic and reinvent themselves. PwC has also been continuing its investments in technology and skills training to enable its employees to work remotely. “Our investment in technology was borne out at the height of the lockdown when 95 percent of our 284,000-strong workforce were operating out of the office with no interruption to the service we were able to provide,” Moritz added.
Despite the pandemic, PwC saw revenue rise over the course of the year in various parts of the world, especially in the Middle East, where it went up 14 percent. Growth was more modest in America and Europe. In the Americas, revenues rose 3 percent with especially good performance in the U.S. and Canada. Revenues in Western Europe were up by 2 percent, while in Central and Eastern Europe, revenues grew 4 percent.
Revenues from the Middle East and Africa rose 10 percent with a strong result from the Middle East, where revenues were up 14 percent. Across Asia, revenues grew 5 percent while in Australasia and the Pacific, revenues were down 1 percent.
However, PwC pointed out that the regional growth numbers for the entire fiscal year mask the impact of COVID-19, with all regions performing as anticipated up until the end of March 2020 and then feeling the full impact of the economic restrictions caused by lockdowns in the months of April, May and June. For the last three months of fiscal 2020, in most markets around the world PwC experienced declines in revenue compared with the same period in FY19, with decreases in revenue of up to 30 percent in certain countries.
In terms of specific lines of business, each saw impacts from COVID-19, and PwC anticipates market conditions will be challenging for all of its operations in the current fiscal year.
Assurance remains PwC’s largest practice area across the world. In fiscal 2020, revenue from assurance operations grew 3 percent to $17.6 billion, driven by continuing strong demand for audit services. PwC has also seen increasing demand for digital risk services as more clients transition to cloud computing. PwC has nearly 119,000 assurance professionals.
On the consulting side, PwC advisory operations grew 4 percent to $14.7 billion, driven by strong demand for advice on strategy, business transformation and value creation in the first nine months of the fiscal year. The operations benefited from teaming with PwC’s tax and risk assurance professionals. PwC Advisory now employs over 71,000 people.
Revenues at PwC Tax & Legal grew 2 percent to $10.7 billion in fiscal 2020, with demand for tax reporting and strategy, people and organization and legal services in the first nine months of the fiscal year offset by the impact of the pandemic in the last three months. PwC Tax & Legal has more than 55,000 professionals.
PwC has needed to reduce its headcount in some parts of the world in response to the pandemic, particularly on the advisory side. In the year ahead, the firm is expecting to face further headwinds.
“While we adapted quickly to many of the new challenges that the COVID-19 pandemic brought, there is no doubt that the next 12 months and beyond are going to be difficult,” Moritz stated. “Our economists are predicting that the global economy will contract by 5.5 percent by the end of 2021, and while different countries will recover at different rates, it is clear that the economic downturn will impact us and our clients across the world.”