International firm Herbert Smith Freehills has reported an 8% drop in profit but says it is ‘cautiously optimistic’ for next year.

According to figures for the year ended 30 April, profit fell by 8% year-on-year to £283.2m and profit per equity partner fell by 10% to £857,000. Revenue crept up, however, from £965.7m to £989.9m.

Justin D’Agostino, who took over as CEO on 1 May 2020, said: ‘It is encouraging that we achieved another year of revenue growth, underlying the core strength of our business. While profitability fell from last year, it reflects our second highest year of profitability performance. Revenue growth would have been stronger still but for the onset of Covid-19.’

He added: ‘Overall, we saw a slower start to the last financial year, with a stronger performance in the second half of the year, notwithstanding the significant challenges of Covid-19, in particular the short term impact we saw on transactional workflows, many of which were put on hold. Our profitability was also impacted by increased operating costs relative to revenue growth and lower productivity compared to the prior year.’

The firm said it was ‘cautiously optimistic’ for the coming year as the impact of the pandemic has been 'less severe for our business than we originally anticipated’.