Quarterly Report • Oct 30, 2020
Quarterly Report
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Amsterdam, 30 October 2020
Jilko Andringa, CEO of Brunel International N.V.: "While the impact of COVID-19 in Q2 was less severe than expected, we experienced more pressure on our revenues in Q3. In today's challenging environment, we continued to perform strongly through operational discipline and cost savings. Brunel colleagues around the world showed a unique combination of discipline and entrepreneurship delivering high quality creative solutions to clients while operating with increased cost awareness. This resulted in a good profitability and cash flow generation.
We have adjusted our organization in every region and aligned it to the current activity level. We still see growth in segments like Renewable Energy and Life Science, but Automotive and Oil & Gas are hit by the global crisis. Although the duration of the pandemic is unknown, our current organization and healthy pipeline of projects makes me very comfortable that we will experience accelerated profitable growth, once travel restrictions ease and our core markets in Europe start to recover.
In the past quarter, we celebrated our 45 years' anniversary. Ever since Jan Brand started Brunel 45 years ago, Brunellers around the world live by our values Integrity, Passion for People, Results Driven and Entrepreneurship, making Brunel a unique company. In every downturn we have managed to find new opportunities while we achieved new records in the following upturn, giving me great confidence in the future."
| Brunel International (unaudited) | ||||||
|---|---|---|---|---|---|---|
| P&L amounts in EUR million | ||||||
| Q3 2020 | Q3 2019 | Δ% | YTD 2020 | YTD 2019 | Δ% | |
| Revenue | 209.6 | 259.7 | a -19% |
690.8 | 784.0 | b -12% |
| Gross Profit | 47.1 | 55.8 | -15% | 143.1 | 161.9 | -12% |
| Gross margin | 22.5% | 21.5% | 20.7% | 20.7% | ||
| Operating costs | 37.0 | 48.5 | c -24% |
124.2 | 143.0 | d -13% |
| EBIT | 10.1 | 7.3 | 37% | 18.9 | 18.9 | 0% |
| EBIT % | 4.8% | 2.8% | 2.7% | 2.4% | ||
| Average directs | 9,599 | 11,225 | -14% | 10,464 | 12,273 | -15% |
| Average indirects | 1,395 | 1,651 | -16% | 1,481 | 1,637 | -10% |
| Ratio direct / Indirect | 6.9 | 6.8 | 7.1 | 7.5 | ||
a -16 % like-for-like b -11 % like-for-like
c -22 % like-for-like d -12 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions
P&L amounts in EUR million
| Revenue | Q3 2020 | Q3 2019 | Δ% | YTD 2020 | YTD 2019 | Δ% |
|---|---|---|---|---|---|---|
| DACH region | 54.6 | 74.5 | -27% | 177.0 | 217.7 | -19% |
| The Netherlands | 45.5 | 49.4 | -8% | 142.7 | 155.7 | -8% |
| Australasia | 26.7 | 31.1 | -14% | 85.0 | 88.4 | -4% |
| Middle East & India | 25.0 | 29.5 | -15% | 88.7 | 85.1 | 4% |
| Americas | 18.4 | 28.1 | -35% | 70.0 | 76.2 | -8% |
| Rest of world | 39.4 | 44.7 | -12% | 126.6 | 120.9 | 5% |
| Subtotal | 209.6 | 257.3 | -19% | 690.0 | 744.0 | -7% |
| BIS | 0.0 | 2.4 | -101% | 0.8 | 40.0 | -98% |
| Total | 209.6 | 259.7 | -19% | 690.8 | 784.0 | -12% |
| EBIT | Q3 2020 | Q3 2019 | Δ% | YTD 2020 | YTD 2019 | Δ% |
| DACH region | 6.8 | 10.7 | -36% | 10.2 | 23.5 | -57% |
| The Netherlands | 3.0 | 2.7 | 12% | 7.8 | 7.0 | 11% |
| Australasia | 0.1 | -0.3 | 154% | -0.2 | -1.2 | 87% |
| Middle East & India | 2.0 | 2.6 | -21% | 7.1 | 7.7 | -8% |
| Americas | -0.5 | -0.8 | 37% | -1.9 | -0.5 | -308% |
| Rest of world | 1.1 | 0.5 | 119% | 3.0 | -0.1 | |
| Unallocated | -2.0 | -1.4 | -40% | -6.4 | -5.7 | -13% |
| Subtotal | 10.5 | 13.9 | -25% | 19.6 | 30.8 | -36% |
| BIS | -0.3 | -6.5 | 94% | -0.7 | -11.8 | 94% |
| Total | 10.2 | 7.3 | 37% | 19.0 | 18.9 | 0% |
The decrease in revenue compared to Q2 was slightly higher than expected due to the weakening of the US-dollar. The fx impact on gross profit and EBIT is minimal, since cost of sales and operating cost have a similar impact as revenue.
The productivity in DACH and the Netherlands of our specialists was at a normal level and thus higher than expected under the current circumstances. As a result, EBIT for Q3 was significantly higher than in Q2.
P&L amounts in EUR million
| Q3 2020 | Q3 2019 | Δ% | YTD 2020 | YTD 2019 | Δ% | |
|---|---|---|---|---|---|---|
| Revenue | 54.6 | 74.5 | -27% | 177.0 | 217.7 | -19% |
| Gross Profit | 19.6 | 27.1 | -28% | 55.2 | 72.5 | -24% |
| Gross margin | 35.8% | 36.3% | 31.2% | 33.3% | ||
| Operating costs | 12.8 | 16.4 | -22% | 45.0 | 49.0 | -8% |
| EBIT | 6.8 | 10.7 | -36% | 10.2 | 23.5 | -57% |
| EBIT % | 12.4% | 14.3% | 5.8% | 10.8% | ||
| Average directs | 2,019 | 2,717 | -26% | 2,200 | 2,713 | -19% |
| Average indirects | 432 | 518 | -16% | 475 | 512 | -7% |
| Ratio direct / Indirect | 4.7 | 5.2 | 4.6 | 5.3 |
As announced in our Q2 results, we do not yet see a recovery in the DACH region yet. Our headcount and revenue development remained stable. In August, the German government announced the extension until the end of 2021 of the short-time working scheme (Kurzarbeit). At the moment, we are still applying the short-time working scheme for 200 of our specialists.
Headcount as of September 30th was 2,007 (2019: 2,735)
Working days Germany:
| Q1 | Q2 | Q3 | Q4 | FY | |
|---|---|---|---|---|---|
| 2020 | 64 | 59 | 66 | 65 | 254 |
| 2019 | 63 | 59 | 66 | 62 | 250 |
Due to the extension of the short-time working scheme and less holidays being taken by our specialists, our productivity remained strong and stable. The gross margin in Q3 was slightly down by 0.5 ppt, mainly due to severance cost. The YTD gross margin adjusted for working days was 30.9% (2019: 33.3%).
In Q3 the operating costs decreased by 22% mainly due to cost saving initiatives and restructuring initiatives implemented in Q2. Throughout the quarter, we also applied the short-time working scheme for a small group of our internal employees. We have ended this at the end of Q3.
P&L amounts in EUR million
| Q3 2020 | Q3 2019 | Δ% | YTD 2020 | YTD 2019 | Δ% | |
|---|---|---|---|---|---|---|
| Revenue | 45.5 | 49.4 | -8% | 142.7 | 155.7 | -8% |
| Gross Profit | 12.4 | 13.8 | -10% | 37.9 | 42.1 | -10% |
| Gross margin | 27.2% | 27.9% | 26.6% | 27.0% | ||
| Operating costs | 9.4 | 11.1 | -15% | 30.1 | 35.1 | -14% |
| EBIT | 3.0 | 2.7 | 12% | 7.8 | 7.0 | 11% |
| EBIT % | 6.5% | 5.4% | 5.5% | 4.5% | ||
| Average directs | 1,844 | 2,172 | -15% | 1,919 | 2,277 | -16% |
| Average indirects | 327 | 405 | -19% | 346 | 417 | -17% |
| Ratio direct / Indirect | 5.6 | 5.4 | 5.6 | 5.5 |
The revenue trend remained stable in Q3, as a result of a decrease in the number of specialists, partly offset by higher rates. The decline was across all business lines except for Legal, in which we continued to achieve growth.
Headcount as of September 30th was 1,835 (2019: 2,155)
Working days per Q 2020 / 2019:
| Q1 | Q2 | Q3 | Q4 | FY | |
|---|---|---|---|---|---|
| 2020 | 64 | 60 | 66 | 65 | 255 |
| 2019 | 63 | 62 | 66 | 64 | 255 |
The gross margin was down 0.7 ppt in Q3. This is the result of an increase in the proportion of freelancers, who have a lower margin compared to own employees. The YTD gross margin adjusted for working days decreased by 0.1 ppt to 26.9%.
In Q3 the operating costs decreased by EUR 1.7 million, as a result of cost saving initiatives, including a reduction of indirect headcount executed in Q2.
P&L amounts in EUR million
| Q3 2020 | Q3 2019 | Δ% | YTD 2020 | YTD 2019 | Δ% | |
|---|---|---|---|---|---|---|
| Revenue | 26.7 | 31.1 | a -14% |
85.0 | 88.4 | b -4% |
| Gross Profit | 2.4 | 2.6 | -6% | 7.2 | 7.3 | -1% |
| Gross margin | 9.0% | 8.3% | 8.4% | 8.2% | ||
| Operating costs | 2.3 | 2.9 | c -21% |
7.4 | 8.5 | d -13% |
| EBIT | 0.1 | -0.3 | 154% | -0.2 | -1.2 | 87% |
| EBIT % | 0.5% | -0.8% | -0.2% | -1.4% | ||
| Average directs | 936 | 906 | 3% | 1,012 | 907 | 12% |
| Average indirects | 80 | 86 | -7% | 82 | 85 | -4% |
| Ratio direct / Indirect | 11.7 | 10.5 | 12.4 | 10.7 | ||
| a -12 % like-for-like |
b -0 % like-for-like
c -19 % like-for-like
d -11 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions
Following a stable Q2, Australasia, which includes Australia and Papua New Guinea, has seen some impact of COVID-19 in Q3. Clients terminate contracts, are looking for salary reductions and a reduction of working hours (overtime) to achieve cost savings. Our activities in PNG continue to be hindered by the travel restrictions.
The increased gross margin is the result of a change in the mix due to the lower revenue at Oil & Gas clients.
In Q3, the operating costs decreased by 21% as a result of continued cost saving initiatives. These cost savings helped us achieve a positive result for the quarter.
P&L amounts in EUR million
| Q3 2020 | Q3 2019 | Δ% | YTD 2020 | YTD 2019 | Δ% | |
|---|---|---|---|---|---|---|
| Revenue | 25.0 | 29.5 | a -15% |
88.7 | 85.1 | b 4% |
| Gross Profit | 4.1 | 5.1 | -20% | 14.5 | 15.0 | -4% |
| Gross margin | 16.2% | 17.2% | 16.3% | 17.7% | ||
| Operating costs | 2.1 | 2.5 | c -16% |
7.4 | 7.3 | d 1% |
| EBIT | 2.0 | 2.6 | -21% | 7.1 | 7.7 | -8% |
| EBIT % | 8.0% | 8.6% | 8.0% | 9.1% | ||
| Average directs | 2,089 | 2,605 | -20% | 2,435 | 3,411 | -29% |
| Average indirects | 130 | 142 | -9% | 139 | 136 | 2% |
| Ratio direct / Indirect | 16.1 | 18.3 | 17.5 | 25.0 | ||
| a -8 % like-for-like | ||||||
| b 6 % like-for-like |
c -12 % like-for-like
d 2 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions
Following a positive development in Q2, the revenues in the Middle East & India were impacted by the weakening of the US dollar. Our strong development is hampered by our ability to mobilize specialists for new projects due to travel restrictions, whilst some of the existing projects are finalized. This resulted in a decrease in headcount and revenue for the period. Our pipeline continues to be healthy.
The gross margin reduced somewhat due to a change in the mix of clients and some margin pressure.
Even though we still experienced growth in Q2, we started adapting the organisation in Middle East & India, anticipating the impact of the travel restrictions. Further cost measures lead to a decrease in operating costs of 16%.
P&L amounts in EUR million
| Q3 2020 | Q3 2019 | Δ% | YTD 2020 | YTD 2019 | Δ% | |||
|---|---|---|---|---|---|---|---|---|
| Revenue | 18.4 | 28.1 | -35% | a | 70.0 | 76.2 | -8% | b |
| Gross Profit | 2.2 | 3.6 | -38% | 7.9 | 9.4 | -16% | ||
| Gross margin | 12.1% | 12.7% | 11.3% | 12.4% | ||||
| Operating costs | 2.7 | 4.4 | -39% | c | 9.8 | 9.9 | -1% | d |
| EBIT | -0.5 | -0.8 | 37% | -1.9 | -0.5 | -308% | ||
| EBIT % | -2.7% | -2.8% | -2.8% | -0.6% | ||||
| Average directs | 689 | 886 | -22% | 771 | 846 | -9% | ||
| Average indirects | 103 | 131 | -21% | 109 | 128 | -15% | ||
| Ratio direct / Indirect | 6.7 | 6.8 | 7.1 | 6.6 | ||||
| a -26 % like-for-like | ||||||||
| b -4 % like-for-like |
c -31 % like-for-like
d 3 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions
Our activities in the US continue to be the most impacted by COVID-19 within our group, following a significant number of terminations at our clients. The devaluation of the US Dollar and Brazilian Real significantly impacted the revenue development in the region.
Just like in the previous quarter, the gross margin and gross profit were impacted by a lower recruitment revenue. Adjusted for the impact of the lower recruitment revenue, the gross margin was at the same level as in Q3 2019.
The operating costs further decreased and are now 14% lower than in Q2, while we had also seen a 20% decline in Q2 compared to the previous quarter. This is largely the result of the full effect of the cost saving measures taken in that quarter.
| P&L amounts in EUR million | |
|---|---|
| ---------------------------- | -- |
| Q3 2020 | Q3 2019 | Δ% | YTD 2020 | YTD 2019 | Δ% | |
|---|---|---|---|---|---|---|
| Revenue | 39.4 | 44.7 | a -12% |
126.6 | 120.9 | b 5% |
| Gross Profit | 6.5 | 7.4 | -12% | 20.5 | 19.1 | 7% |
| Gross margin | 16.6% | 16.6% | 16.2% | 15.8% | ||
| Operating costs | 5.4 | 6.9 | c -22% |
17.5 | 19.2 | d -9% |
| EBIT | 1.1 | 0.5 | 119% | 3.0 | -0.1 | 2356% |
| EBIT % | 2.7% | 1.1% | 2.4% | -0.1% | ||
| Average directs | 2,022 | 1,803 | 12% | 2,107 | 1,813 | 16% |
| Average indirects | 261 | 288 | -9% | 267 | 285 | -6% |
| Ratio direct / Indirect | 7.7 | 6.3 | 7.9 | 6.4 | ||
| a -6 % like-for-like | ||||||
| b 7 % like-for-like | ||||||
| c -17 % like-for-like |
Like-for-like is measured excluding the impact of currencies, acquisitions and discontinued operations
d -7 % like-for-like
Rest of World includes Russia & Caspian, Belgium and Asia. We still managed to achieve growth in China, but saw a decline in the other regions. The pipeline for Asia and Russia remains very healthy, but again this will only materialize once travel restrictions ease.
The gross margin in the region in Q3 was in line with Q3 2019.
The operating costs in the rest of world decreased as a result of government relief plans in Asia and cost saving initiatives throughout the regions. As a result, EBIT for the quarter increased to EUR 1.1 million.
In the first nine months of this year, we achieved a strong free cash flow of EUR 38 million. This results in a cash position of EUR 130 million (30 September 2019: EUR 82 million).
At the moment, the headcount in DACH and the Netherlands is pretty stable, and we expect the normal seasonal pattern in the remainder of Q4.
For all other regions, we are still hindered by travel restrictions. With the increasing number of COVID-19 cases in many regions, we do not expect these to ease significantly in the remainder of the year. Although we have a healthy pipeline, this will delay the start and the contribution of new projects we have secured.
In line with our normal seasonality, revenue and profitability in Q4 will be lower than in Q3.
Not for publication
----------------------------------------------------------------------------------------------------------------------------- For further information:
| Jilko Andringa | CEO | tel.: +31(0)20 312 50 81 |
|---|---|---|
| Peter de Laat | CFO | tel.: +31(0)20 312 50 81 |
| Graeme Maude | COO | tel.: +31(0)20 312 50 81 |
Brunel International N.V. is a global provider of flexible workforce solutions and expertise. We deliver tailor made solutions like Recruitment, Global Mobility, Project Management, Secondment, Consultancy or scope of work for our clients, both on a global scale and on a local level. Our ability to help our clients beyond their expectations is a testament to our people and their entrepreneurial spirit, knowledge and results-driven approach. Our people are at the heart of everything we do.
We connect the most talented professionals with leading clients in Oil & Gas, Renewable Energy, Automotive, Mining, Life Sciences and Infrastructure.
Incorporated in 1975, Brunel has since become a global company with over 12,900 employees and annual revenue of EUR 1.0 billion (2019). The company is listed at Euronext Amsterdam N.V. For more information on Brunel International N.V. visit our website www.brunelinternational.net.
| 12 February 2021 | Publication Full Year 2020 results |
|---|---|
| 30 April 2021 | Trading update for the first quarter 2021 |
| 11 May 2021 | Annual general meeting of shareholders |
| 30 July 2021 | Publication half-year 2021 results |
| 29 October 2021 | Trading update for the third quarter 2021 |
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.
The financial figures as presented in this press release are unaudited.
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