Earnings Release • Aug 19, 2016
Earnings Release
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Amsterdam, 19 August 2016
| Brunel International (unaudited) | |||||
|---|---|---|---|---|---|
| Change | Change | ||||
| Q2 2016 | Q2 2015 | % | H1 2016 | H1 2015 | % |
| 231.2 | 317.1 | -27%a | 469.6 | 650.8 | -28% b |
| 47.7 | 54.3 | -12% | 95.6 | 113.6 | -16% |
| 20.6% | 17.1% | 20.4% | 17.5% | ||
| 40.2 | 45.1 | -11% c | 79.0 | 90.1 | -12% d |
| 7.5 | 9.2 | -19% | 16.6 | 23.5 | -29% |
| 3.2% | 2.9% | 3.5% | 3.6% | ||
| 9,336 | 10,983 | -15% | 9,629 | 11,171 | -14% |
| 1,500 | 1,677 | -11% | 1,526 | 1,648 | -7% |
| 6.2 | 6.5 | -5% | 6.3 | 6.8 | -7% |
| P&L amounts in EUR million |
a -25% in constant currency (cc)
b -26% in cc
c -10% in cc
d -11% in cc
| Brunel Energy (unaudited) | |||||
|---|---|---|---|---|---|
| Change | |||||
| Q2 2016 | Q2 2015 | % | H1 2016 | H1 2015 | % |
| 119.8 | 220.8 | -46% a | 248.3 | 452.5 | -45% b |
| 13.3 | 26.6 | -50% | 27.3 | 53.0 | -48% |
| 12.7 | 17.0 | -25% c | 25.0 | 35.5 | -30% d |
| 0.6 | 9.6 | -94% | 2.3 | 17.5 | -87% |
| 0.5% | 4.3% | 0.9% | 3.9% | ||
| 4,656 | 6,544 | -29% | 4,911 | 6,739 | -27% |
| 598 | 778 | -23% | 613 | 752 | -18% |
| 7.8 | 8.4 | 8.0 | 9.0 | ||
| P&L amounts in EUR million 11.1% |
12.1% | Change | 11.1% | 11.7% |
a -43% in cc
Revenue in Q2 decreased by 46% year on year, and 7% compared to Q1. Our clients continue to delay and terminate projects and to reduce the number of staff. The focus in the industry on capex cuts and cost savings keeps influencing our business significantly. Consequently our headcount decreased by 29%. The decline in revenue is also affected by reductions of our contractors' rates.
Due to the nature of our contracts, the increased price pressure so far only has had limited effect on our rates, resulting in a decline in gross margin. Adjusted for negative currency effects (mainly by the appreciating Ruble), the gross margin for Q2 is 11.3%. In combination with the lower top line, gross profit dropped by 50% to EUR 13 million. The impact of the price pressure on our existing business is likely to increase in the near future.
b-42% in cc
c -22% in cc d
-27% in cc
We continue to right size our organisation. Overhead decreased by 25%, mainly driven by the reduction of internal staff costs, following the ongoing efficiency programme and investments in operating efficiencies. Q2's overhead expenses included EUR 1 million of one off expenses for redundancies and doubtful debt.
As a consequence of the decrease in activities, EBIT declined to EUR 0.6 million for Q2.
| Brunel Europe (unaudited) | ||||||
|---|---|---|---|---|---|---|
| P&L amounts in EUR million | ||||||
| Q2 2016 | Q2 2015 Change % | H1 2016 | H1 2015 Change % | |||
| Revenue | 111.4 | 96.2 | 16% | 221.3 | 198.3 | 12% |
| Gross Profit | 34.4 | 27.7 | 24% | 68.4 | 60.7 | 13% |
| Gross Margin | 30.9% | 28.8% | 30.9% | 30.6% | ||
| Operating costs | 24.8 | 25.6 | -3% | 49.3 | 50.1 | -2% |
| EBIT | 9.6 | 2.1 | 362% | 19.1 | 10.6 | 80% |
| EBIT % | 8.6% | 2.2% | 8.6% | 5.4% | ||
| Average directs | 4,680 | 4,439 | 5% | 4,718 | 4,432 | 5% |
| Average indirects | 859 | 884 | -3% | 870 | 896 | -3% |
| Ratio direct/indirect | 5.4 | 5.0 | 5.4 | 5.0 |
Brunel Europe consists of Brunel Germany, Brunel Netherlands, Brunel Belgium, Brunel Czech Republic, Brunel Switzerland and Brunel Austria.
| Brunel Germany (unaudited) | ||||||||
|---|---|---|---|---|---|---|---|---|
| P&L amounts in EUR million | ||||||||
| Change | Change | |||||||
| Q2 2016 | Q2 2015 | % | H1 2016 | H1 2015 | % | |||
| Revenue | 52.9 | 45.9 | 15% | 102.5 | 94.5 | 8% | ||
| Gross Profit | 18.9 | 14.9 | 27% | 35.8 | 31.9 | 12% | ||
| Gross Margin | 35.7% | 32.5% | 34.9% | 33.7% | ||||
| Operating costs | 12.6 | 13.0 | -3% | 24.5 | 25.6 | -4% | ||
| EBIT | 6.3 | 1.9 | 232% | 11.3 | 6.3 | 79% | ||
| EBIT % | 11.9% | 4.1% | 11.0% | 6.7% | ||||
| Average directs | 2,174 | 2,012 | 8% | 2,160 | 2,035 | 6% | ||
| Average indirects | 405 | 447 | -9% | 416 | 449 | -7% | ||
| Ratio direct/indirect | 5.4 | 4.5 | 5.2 | 4.5 |
The limited growth in Q1 accelerated as projected in Q2 to double digit growth, helped by 2.7 additional working days. Revenue per working day increased by 10%. Our workforce continued to grow during the second quarter. June showed the strongest growth so far in this year.
Gross profit increased by 27% following the revenue growth and higher gross margin. Adjusted for working days, the gross margin remained flat.
The strong gross profit improvements combined with a limited overhead reduction increased EBIT to over EUR 6 million in Q2.
| P&L amounts in EUR million | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Q2 2016 | Q2 2015 Change % | H1 2016 | H1 2015 Change % | ||||||
| Revenue | 49.2 | 43.1 | 14% | 100.9 | 88.4 | 14% | |||
| Gross Profit | 13.4 | 11.2 | 20% | 28.5 | 25.0 | 14% | |||
| Gross Margin | 27.3% | 25.9% | 28.2% | 28.3% | |||||
| Operating costs | 10.2 | 10.5 | -3% | 20.7 | 20.3 | 2% | |||
| EBIT | 3.2 | 0.7 | 360% | 7.7 | 4.7 | 64% | |||
| EBIT % | 6.5% | 1.6% | 7.6% | 5.4% | |||||
| Average directs | 2,173 | 2,078 | 5% | 2,224 | 2,047 | 9% | |||
| Average indirects | 381 | 367 | 4% | 381 | 362 | 5% | |||
| Ratio direct/indirect | 5.7 | 5.7 | 5.8 | 5.7 |
The growth in Q2 was helped by two additional working days. Revenue per working day increased by 10%. The business line IT was again a very strong performer comparing Q2 year on year, followed by the business line Marketing & Communications. Engineering and Finance remained flat. Finance is affected by the current state of affairs with some of the main players in the financial industry.
In Q2 we have also seen the first effect of the implementation of new legislation for freelancers with the start of the transition period. The uncertainty around this transition period has lead to different interpretations in our industry, where we appear to be more stringent. As a result, we have seen a considerable number of freelancers transferring to our competitors.
Gross margin improved mainly as a result of the additional working days, partly offset by lower productivity due to training initiatives. In combination with the revenue growth, gross profit grew by 20%.
The gross profit improvement drove the strong EBIT expansion, helped by a limited decrease of overhead.
The effective tax rate in the first half year of 2016 is 37.9%, at the same level as the same period last year. For the full year we project the effective tax rate to come down.
Reference is made to our 2015 Annual Report (pages 63 – 81). Reassessment of our earlier identified risks and the potential impact on occurrence has not resulted in required changes in our internal risk management and control systems.
Brunel's cash position remained strong compared to December 2015 at EUR 137 million, despite the dividend and super dividend payment in June 2016.
The difficult circumstances in the Energy market still cause uncertainty around the developments for the rest of the year, and will continue to impact our results. Our organisation continues to win new clients and projects, also outside Oil & Gas. However, these developments are not yet sufficient to compensate the decline in our existing business. We are adjusting our organisation and business model to the changing market circumstances.
In The Netherlands, our growth will be temporarily affected by the reduction in freelancers following the recent change in labour law, and we expect limited growth in the remainder of the year. We will continue to invest in our organisation by strengthening our sales force, but also by further improving our online sourcing capabilities.
In Germany we foresee continued strong growth.
For the full year, we expect revenue between EUR 850 million and EUR 900 million and EBIT between EUR 30 million and EUR 35 million.
Jan Arie van Barneveld, CEO of Brunel International N.V.: "Our business in the Oil & Gas market remains very challenging, and at this moment we feel that this market will not improve in the coming twelve months. We continue to improve our operational performance and processes in Energy to remain profitable in this challenging environment. In the past Brunel has shown the capability to use difficult circumstances to make the company stronger, with Germany and The Netherlands being the most recent examples. I am very proud of our achievements in the German organisation, where we found the growth path again and I am confident we will stay on this track."
The Board of Directors of Brunel International N.V. hereby declares that, to the best of its knowledge, the interim financial statements give a true and fair view of the assets, liabilities, financial position and result of Brunel International N.V. and the companies jointly included in the consolidation, and that the interim report gives a true and fair view of the information referred to in the eighth and, insofar as applicable, the ninth subsection of Section 5:25d of the Dutch Act on Financial Supervision and with reference to the section on related parties in the interim financial statements.
Amsterdam, 19 August 2016 Brunel International N.V.
Jan Arie van Barneveld (CEO) Peter de Laat (CFO) Arjan de Vries (COO Energy)
For further information:
Jan Arie van Barneveld CEO Brunel International N.V. tel.: +31(0)20 312 50 79 Peter de Laat CFO Brunel International N.V. tel.: +31(0)20 312 50 81
Brunel International N.V. is an international service provider specialising in the flexible deployment of knowledge and capacity in the fields of Engineering, Oil & Gas, Aerospace, Automotive, ICT, Finance, Legal and Insurance & Banking. Services are provided in the form of Project Management, Secondment and Consultancy. Incorporated in 1975, Brunel has since become a global company with over 11,000 employees and annual revenue of EUR 1.2 billion (2015). The company is listed at Euronext Amsterdam N.V. For more information on Brunel International N.V. visit our website www.brunelinternational.net.
4 November 2016 Trading update for the third quarter 2016
Certain statements in this document concern prognoses about the future financial condition and the results of operations of Brunel International N.V. as well as plans and objectives. Obviously, such prognoses involve risks and a degree of uncertainty since they concern future events and depend on circumstances that will apply then. Many factors may contribute to the actual results and developments differing from the prognoses made in this document. These factors include general economic conditions, a shortage on the job market, changes in the demand for (flexible) personnel, changes in employment legislation, future currency and interest fluctuations, future takeovers, acquisitions and disposals and the rate of technological developments. These prognoses therefore apply only on the date on which the document was compiled.
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