Deloitte’s UK partners took home about £1 million (€1.2 million) on average for the fourth year in a row, despite the Big Four firm suffering a sharp slowdown in revenue growth due to waning demand for its advisory services.
Partners received payouts of £1.01 million on average for the year to the end of May, 5 per cent less than the previous year, following an increase in the number of equity partners who share in the firm’s profits. Its top ranks swelled from 714 last year to 749, while the profit pool to be shared between them remained flat at £756 million.
Deloitte is the only Big Four firm in the UK to report an average partner payout higher than £1 million in the last two financial years.
Revenue at Deloitte’s UK firm, which also encompasses its Swiss operations, rose by 2.4 per cent to £5.7 billion – a sharp slowdown on the 14 per cent growth recorded in the previous 12 months. In the year to May 2022, Deloitte had boosted revenue by 10 per cent.
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The slowdown was driven by a slight contraction in the firm’s consulting division – its largest service line – where sales fell 1 per cent to £1.58 billion as a tougher economic backdrop forced companies to cut spending on external advisory firms.
Revenues at Deloitte’s financial advisory practice also declined 2 per cent during the year as merger and acquisition activity remained subdued.
The weaker results underline the difficult year faced by the Big Four – Deloitte, EY, KPMG and PwC – which were all forced to cut hundreds of jobs each due to tougher market conditions. PwC last week said its UK revenues rose 3 per cent during its most recent financial year, while average partner pay fell 5 per cent to £862,000.
“This is a strong set of results in a challenging market, against a difficult economic and geopolitical backdrop,” said Richard Houston, Deloitte’s UK senior partner and chief executive. “Like many businesses, we had to carefully consider our cost base and make some difficult choices this year.”
Audit and assurance was Deloitte’s best-performing service line during the year, with revenues climbing 8 per cent to £941mn. The firm’s tax and legal division also posted sales growth of 3 per cent to £1.25 billion. Risk advisory sales remained flat with sales of £495 million.
The firm said it invested £263 million in salary increases and bonuses during the year.
Houston sounded a more upbeat note looking ahead, saying that the UK’s economic outlook has been improving in the past 12 months. He added: “A recovering economy, alongside the government’s commitment to work with business in tackling economic and technological challenges, offers the prospect of stronger growth to come.”
Deloitte is in the process of overhauling its global operations to cut costs and reduce the group’s complexity. Under the plan, its main business units will be reduced to four – audit and assurance; strategy, risk and transactions; technology and transformation; and tax and legal – from the five the firm has had for the last decade.
The firm last month posted global revenues of $67.2 billion, a 3 per cent increase on the previous year, its weakest sales growth since 2010.
Deloitte’s headcount at its UK and Swiss business remained broadly flat at 27,573 at year end. – Copyright The Financial Times Limited 2024
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