The City’s top international firms appear to be riding high on sterling’s decline against the dollar, according to a clutch of annual results announced last week. However performance is mixed when fully adjusted for currency fluctuations – with several firms reporting profit growth lagging turnover.
Magic circle firm Clifford Chance and international firms Clyde & Co, Herbert Smith Freehills and Pinsent Masons all said sterling’s fall against the dollar contributed to a steep rise in sterling revenue in 2016/17.
Clifford Chance reported an 11% rise in revenue to £1.5bn and a 12% rise in profit per equity partner (PEP), to £1.3m. However, it noted that in real terms, ‘excluding the impact of exchange rates and one-off items’, revenues increased by 2% and partnership profit by 8.5%.
HSF and Clyde & Co both reported strong rises in revenues on the back of sterling’s depreciation. HSF reported a 1% decline in profits, from £259m to £256m. However, revenues were up 10.6% to £920.5m.
Clyde reported profits growing strongly, but at a lower rate than turnover. For the year ended 30 April, profits were up 9% to £127.6m and revenues 14% to £508.1m. The firm said currency movements accounted for 5% of the revenue growth figure. PEP declined 2% to £650,000. Global chief executive Peter Hasson said the results came against the backdrop of a ‘challenging macro environment’.
Pinsent Masons had a global turnover of £423.1m, an 11% rise on the financial year 2015/16, while PEP rose to £625,000, a 14% increase. However, excluding the impact of currency fluctuations, the firm achieved like-for-like turnover growth of 7%, it said.
Magic circle firm Freshfields Bruckhaus Deringer reported a fall in net profit on the back of flat income for 2016/17. In the year to 30 April, revenue climbed £3m (0.3%) to £1.33bn, while net profit dipped £5m (-0.8%) to £612m.