Q2 2019: Continued double digit revenue and EBIT growth (excluding
one-off), results impacted by loss on contract in new activities
Amsterdam, 2 August 2019
Key points Q2 2019
- Revenue up by 17% to EUR 258 million
- EBIT (excluding one-off) up by 21% to EUR 5 million
- EBIT EUR 0.5 million negative due to one-off loss of 5.5
million
Key points H1 2019
- Revenue up by 20% to EUR 524 million
- EBIT (excluding one-off) up by 51% to EUR 17 million, reported
EBIT up by 3% to EUR 12 million
Jilko Andringa, CEO of Brunel International
N.V.: “We continued to outperform in key markets like Germany and
Middle East & India. However, we also incurred a one-off
loss in the USA.
In line with our entrepreneurial spirit, we
started an entity to build up new project capabilities in Texas.
With this new entity, we won many new projects. One of the initial
projects did not go as planned and resulted in a loss. As painful
as this is, we used the learnings of this project to improve our
team, processes and controls. Supported by the improved settings,
this new activity delivers profitable revenue growth.
In the DACH region, we continued to grow, while
we experienced some impact from the weakness in the Automotive
Industry. This has not reduced headcount and productivity, as we
continued to focus on other growth markets, in line with our
strategy of diversification. In the Netherlands, despite a revenue
decline, we were able to realize a higher EBIT than Q2 last year,
as a result of operational control and cost savings.
Overall, Brunel realized strong growth in most
of its regions in the first half of 2019. Outside of Europe, we see
project activity and our pipeline increasing. Taking into account
some project ramp-up time this will lead to continued growth in
revenue and profitability”.
Brunel
International (unaudited) |
P&L amounts in EUR
million |
|
|
|
|
|
|
|
|
|
Q2 2019 |
Q2 2018 |
Δ% |
|
|
H1 2019 |
H1 2018 |
Δ% |
|
Revenue |
258.1 |
221.3 |
17% |
a |
|
524.2 |
435.1 |
20% |
b |
Gross Profit |
47.0 |
48.7 |
-3% |
|
|
106.1 |
98.7 |
8% |
|
Gross margin |
18.2% |
22.0% |
|
|
|
20.2% |
22.7% |
|
|
Operating costs |
47.5 |
44.6 |
7% |
c |
|
94.5 |
87.4 |
8% |
d |
EBIT |
-0.5 |
4.1 |
|
|
|
11.6 |
11.3 |
3% |
|
EBIT % |
-0.2% |
1.8% |
|
|
|
2.2% |
2.6% |
|
|
|
|
|
|
|
|
|
|
|
|
Average directs |
12,607 |
11,889 |
6% |
|
|
12,797 |
11,558 |
11% |
|
Average indirects |
1,650 |
1,539 |
7% |
|
|
1,630 |
1,533 |
6% |
|
Ratio direct / Indirect |
7.6 |
7.7 |
|
|
|
7.9 |
7.5 |
|
|
|
|
|
|
|
|
|
|
|
|
a 15 % at constant
currencies |
|
|
|
|
|
|
b 18 % at constant
currencies |
|
|
|
|
|
|
c 6 % at constant
currencies |
|
|
|
|
|
|
d 7 % at constant
currencies |
|
|
|
|
|
|
H1 2019 results by divisionP&L amounts in
EUR million
Summary:
Revenue |
Q2 2019 |
Q2 2018 |
Δ% |
|
H1 2019 |
H1 2018 |
Δ% |
|
|
|
|
|
|
|
|
DACH
region |
69.6 |
65.8 |
6% |
|
143.2 |
130.0 |
10% |
The
Netherlands |
51.9 |
54.1 |
-4% |
|
106.3 |
110.3 |
-4% |
Australasia |
28.6 |
28.3 |
1% |
|
57.3 |
56.0 |
2% |
Middle East
& India |
28.6 |
20.3 |
41% |
|
55.6 |
39.5 |
41% |
Rest of
world |
79.4 |
52.9 |
50% |
|
161.9 |
99.4 |
63% |
|
|
|
|
|
|
|
|
Total |
258.1 |
221.3 |
17% |
|
524.2 |
435.1 |
20% |
EBIT |
Q2 2019 |
Q2 2018 |
Δ% |
|
H1 2019 |
H1 2018 |
Δ% |
|
|
|
|
|
|
|
|
DACH
region |
4.3 |
4.7 |
-8% |
|
12.8 |
10.4 |
24% |
The
Netherlands |
1.6 |
1.1 |
39% |
|
4.4 |
5.3 |
-18% |
Australasia |
-0.4 |
-0.5 |
23% |
|
-1.0 |
-0.5 |
-91% |
Middle East
& India |
2.3 |
1.7 |
37% |
|
5.2 |
3.4 |
51% |
Rest of
world |
-6.6 |
-0.4 |
-1426% |
|
-6.0 |
-2.3 |
-160% |
Unallocated |
-1.7 |
-2.4 |
32% |
|
-3.8 |
-5.0 |
23% |
|
|
|
|
|
|
|
|
Total |
-0.5 |
4.1 |
-112% |
|
11.6 |
11.3 |
3% |
DACH region
(unaudited) |
P&L amounts in EUR
million |
|
|
|
|
|
|
|
|
Q2 2019 |
Q2 2018 |
Δ% |
|
|
H1 2019 |
H1 2018 |
Δ% |
Revenue |
69.6 |
65.8 |
6% |
|
|
143.2 |
130.0 |
10% |
Gross Profit |
20.6 |
20.1 |
2% |
|
|
45.4 |
40.7 |
11% |
Gross margin |
29.6% |
30.6% |
|
|
|
31.7% |
31.3% |
|
Operating costs |
16.3 |
15.4 |
6% |
|
|
32.6 |
30.3 |
8% |
EBIT |
4.3 |
4.7 |
-8% |
|
|
12.8 |
10.4 |
24% |
EBIT % |
6.2% |
7.1% |
|
|
|
9.0% |
8.0% |
|
|
|
|
|
|
|
|
|
|
Average directs |
2,725 |
2,606 |
5% |
|
|
2,712 |
2,565 |
6% |
Average indirects |
516 |
476 |
8% |
|
|
509 |
474 |
7% |
Ratio direct / Indirect |
5.3 |
5.5 |
|
|
|
5.3 |
5.4 |
|
Revenue
This region includes Germany, Switzerland,
Austria and Czech Republic. In Q2 we started to experience some
slowdown in the Automotive market, but have been able to balance
this through our diversification approach and found projects for
our specialists in other market segments.
Revenue per working day increased by 7% in Q2,
despite a slightly lower productivity due to vacation. In H1
revenue per working day increased by 11%. Headcount at 30 June 2019
is 3% above last year’s headcount and we experienced a 3-4% price
increase through the first half of 2019.
Working days
|
Q1 |
Q2 |
Q3 |
Q4 |
FY |
2019 |
63 |
59 |
66 |
62 |
250 |
2018 |
63 |
60 |
65 |
62 |
250 |
Gross ProfitThe gross margin adjusted for
working days in Q2 is 30.6% (Q2 2018: 30.6%). The gross margin
adjusted for working days in H1 is 32.2% (H1 2018: 31.3%). Adjusted
for working days, the gross profit in Q2 increased by 7%, or EUR
1.5 million.
Operating costsOperating costs in Q2 increased
by 6% mainly driven by continued investments in our commercial
organization.
Brunel
Netherlands (unaudited) |
P&L amounts in EUR
million |
|
|
|
|
|
|
|
|
Q2 2019 |
Q2 2018 |
Δ% |
|
|
H1 2019 |
H1 2018 |
Δ% |
Revenue |
51.9 |
54.1 |
-4% |
|
|
106.3 |
110.3 |
-4% |
Gross Profit |
13.2 |
14.2 |
-7% |
|
|
28.3 |
31.2 |
-9% |
Gross margin |
25.4% |
26.3% |
|
|
|
26.6% |
28.2% |
|
Operating costs |
11.6 |
13.1 |
-11% |
|
|
23.9 |
25.9 |
-8% |
EBIT |
1.6 |
1.1 |
39% |
|
|
4.4 |
5.3 |
-18% |
EBIT % |
3.0% |
2.1% |
|
|
|
4.1% |
4.8% |
|
|
|
|
|
|
|
|
|
|
Average directs |
2,284 |
2,455 |
-7% |
|
|
2,330 |
2,437 |
-4% |
Average indirects |
417 |
434 |
-4% |
|
|
423 |
428 |
-1% |
Ratio direct / Indirect |
5.5 |
5.7 |
|
|
|
5.5 |
5.7 |
|
Revenue
Revenue per working day in the
Netherlands decreased by 6% in Q2. This decline is caused
by clients actively taking over our professionals, in combination
with challenges to recruit new professionals due to the scarcity in
the labour market.
Working days
|
Q1 |
Q2 |
Q3 |
Q4 |
FY |
2019 |
63 |
62 |
66 |
64 |
255 |
2018 |
64 |
61 |
65 |
64 |
254 |
Gross ProfitThe gross margin adjusted for
working days in Q2 is 24.3% (Q2 2018: 26.3%). The decline in gross
margin is mainly caused, as in Q1, by a higher bench and margin
pressure. In June the bench returned to a normal level of 4%.
Operating costsIn Q2 the operating costs
decreased by EUR 1.5 million as a result of cost saving initiatives
and the costs related to digital market initiatives we incurred in
2018.
Australasia
(unaudited) |
P&L amounts in EUR
million |
|
|
|
|
|
|
|
|
|
Q2 2019 |
Q2 2018 |
Δ% |
|
|
H1 2019 |
H1 2018 |
Δ% |
|
Revenue |
28.6 |
28.3 |
1% |
a |
|
57.3 |
56.0 |
2% |
b |
Gross Profit |
2.4 |
2.2 |
7% |
|
|
4.7 |
4.6 |
3% |
|
Gross margin |
8.3% |
7.8% |
|
|
|
8.2% |
8.2% |
|
|
Operating costs |
2.8 |
2.7 |
4% |
c |
|
5.7 |
5.1 |
12% |
d |
EBIT |
-0.4 |
-0.5 |
23% |
|
|
-1.0 |
-0.5 |
-91% |
|
EBIT % |
-1.4% |
-1.8% |
|
|
|
-1.7% |
-0.9% |
|
|
|
|
|
|
|
|
|
|
|
|
Average directs |
908 |
932 |
-3% |
|
|
908 |
928 |
-2% |
|
Average indirects |
85 |
75 |
13% |
|
|
85 |
76 |
11% |
|
Ratio direct / Indirect |
10.7 |
12.5 |
|
|
|
10.7 |
12.2 |
|
|
|
|
|
|
|
|
|
|
|
|
a 3 % at constant
currencies |
|
|
|
|
|
|
b 3 % at constant
currencies |
|
|
|
|
|
|
c 2 % at constant
currencies |
|
|
|
|
|
|
d 12 % at constant
currencies |
|
|
|
|
|
|
RevenueAustralasia includes Australia and Papua
New Guinea. Australasia managed to achieve limited growth, even
despite a challenging and competitive environment in the mining
sector. The growth is mainly driven by our traditional services in
the Oil & Gas sector.
Gross ProfitThe improved gross margin is mainly
the result of our diversification in mining and other types of
services.
Operating costsThe increased operating costs
reflect our investments in diversification and the sales team.
Middle East
& India (unaudited) |
P&L amounts in EUR
million |
|
|
|
|
|
|
|
|
|
Q2 2019 |
Q2 2018 |
Δ% |
|
|
H1 2019 |
H1 2018 |
Δ% |
|
Revenue |
28.6 |
20.3 |
41% |
a |
|
55.6 |
39.5 |
41% |
b |
Gross Profit |
5.2 |
3.6 |
43% |
|
|
10.0 |
7.0 |
43% |
|
Gross margin |
18.0% |
17.8% |
|
|
|
17.9% |
17.6% |
|
|
Operating costs |
2.9 |
1.9 |
53% |
c |
|
4.8 |
3.6 |
33% |
d |
EBIT |
2.3 |
1.7 |
37% |
|
|
5.2 |
3.4 |
51% |
|
EBIT % |
8.0% |
8.2% |
|
|
|
9.3% |
8.7% |
|
|
|
|
|
|
|
|
|
|
|
|
Average directs |
3,697 |
3,105 |
19% |
|
|
3,815 |
2,749 |
39% |
|
Average indirects |
137 |
114 |
21% |
|
|
133 |
113 |
18% |
|
Ratio direct / Indirect |
27.0 |
27.3 |
|
|
|
28.6 |
24.3 |
|
|
|
|
|
|
|
|
|
|
|
|
a 35 % at constant
currencies |
|
|
|
|
|
|
b 33 % at constant
currencies |
|
|
|
|
|
|
c 42 % at constant
currencies |
|
|
|
|
|
|
d 29 % at constant
currencies |
|
|
|
|
|
|
Revenue
We achieved another very strong quarter in
Kuwait, Qatar and India. We continue to see a strong pipeline of
work and we expanded by opening new offices in India, and setting
up businesses in Oman and Abu Dhabi.
Gross ProfitThe gross margin is in line with
2018 and varies based on the relative share of project business
versus traditional manpower offerings.
Operating costsThe increase in operating costs
is the result of the investments we made in our organisation to
support continued strong growth. As a result of the implementation
of IFRS 16, an amount of EUR 0.8 million is now recorded under
operating costs, which was previously recorded in cost of
sales.
Rest of
world (unaudited) |
P&L amounts in EUR
million |
|
|
|
|
|
|
|
|
|
Q2 2019 |
Q2 2018 |
Δ% |
|
|
H1 2019 |
H1 2018 |
Δ% |
|
Revenue |
79.4 |
52.9 |
50% |
a |
|
161.9 |
99.4 |
63% |
b |
Gross Profit |
5.8 |
8.5 |
-32% |
|
|
17.8 |
15.3 |
17% |
|
Gross margin |
7.2% |
16.1% |
|
|
|
11.0% |
15.4% |
|
|
Operating costs |
12.4 |
8.9 |
39% |
c |
|
23.8 |
17.6 |
35% |
d |
EBIT |
-6.6 |
-0.4 |
|
|
|
-6.0 |
-2.3 |
-160% |
|
EBIT % |
-8.3% |
-0.8% |
|
|
|
-3.7% |
-2.3% |
|
|
|
|
|
|
|
|
|
|
|
|
Average directs |
2,992 |
2,791 |
7% |
|
|
3,033 |
2,880 |
5% |
|
Average indirects |
443 |
386 |
15% |
|
|
429 |
387 |
11% |
|
Ratio direct / Indirect |
6.8 |
7.2 |
|
|
|
7.1 |
7.4 |
|
|
|
|
|
|
|
|
|
|
|
|
a 44 % at constant
currencies |
|
|
|
|
|
|
b 57 % at constant
currencies |
|
|
|
|
|
|
c 35 % at constant
currencies |
|
|
|
|
|
|
d 32 % at constant
currencies |
|
|
|
|
|
|
RevenueRest of World includes Americas, Russia,
Belgium and Asia. The Americas show significant growth, also driven
by the entrance to the shale market we obtained with our new
activities in Texas. Excluding a one-off loss the Americas has
returned to profitability in H1 2019.In Asia, we see activities on
the yards increasing.
Gross ProfitThe gross margin decreased
significantly due to the lump sum project in the USA. Adjusted for
this loss, the gross margin amounts 14.2%, down 1.9 ppt., due to a
change in the mix of countries and services.
Operating costsThe operating costs increased to
support further growth throughout these regions.
New activities in Texas
In 2017, we started Brunel Industry Services
(BIS) in Pasadena, Texas. These activities have provided us access
to the shale market and are currently one of the strong drivers of
growth, and EBIT contribution.
We encountered a one-off loss on a project for a
water treatment plant. After a successful fixed price contract for
the maintenance of water treatment tanks in 2017, we were granted a
second project in July 2018. This was a EUR 12 million fixed price
project for a water treatment plant, based on the design and
engineering of our client. Work on this project started in
September 2018 and even though we experienced a backlog, project
management seemed in control, and the project appeared successful
by year-end 2018.
In June 2019, at 55% completion, our new
experienced BIS leader and his team had to determine that the
project had not advanced as expected. A re-estimate resulted in a
EUR 5.5 million loss for the total project until completion which
is scheduled in Q1 2020. The loss is recognised in the Q2
results.
The re-estimate is made up of many components,
from missing parts in the initial bid, inefficiencies in the
performance of the team, resulting in a lack of progress,
disadvantageous renegotiations with subcontractors and insufficient
project management.
We have replaced the general manager of Brunel
Industry Services (BIS), strengthened the organisation, improved
processes and procedures, and reduced our risk-appetite in the
acceptance of new projects to prevent this type of incidents to
occur in the future. Brunel does not have any similar type of
contracts anywhere in the world.
Effective tax rateThe effective
tax rate in the first half year of 2019 is 52.0% (2018 at 54.4%).
Due to the seasonality in our businesses in the Netherlands DACH
region and the negative impact from the one-off loss in the USA in
Q2, we expect the effective tax rate for the full year to come down
significantly to around 35%.
Risk profileReference is made
to our 2018 Annual Report (pages 93 - 116). 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.
Cash positionBrunel’s cash
position decreased to EUR 60.6 million in line with our
expectations, due to the increased working capital as a result of
growth, our normal seasonality in our cash flow and the dividend
payment in June.
Outlook for
2019In the DACH region, we expect limited
growth in the remainder of the year, with increased profitability.
Cost savings in the Netherlands will result in an improved EBIT,
despite a decline in revenue. The Middle East will continue its
strong performance, whilst the strong growth in the Rest of the
World will support a return to profitability in the course of the
second half of 2019.
For the full year we expect revenue between EUR
1,025 billion and 1,075 billion and normalized EBIT between
EUR 43.5 million and EUR 48.5 million. Including the one-off
loss of EUR 5.5 million, we expect the full year EBIT to end up
between 38 million and 43 million.
Statement of the Board of
DirectorsThe 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, 2 August 2019Brunel International
N.V.
Jilko Andringa (CEO)Peter de Laat (CFO)
- Press release Q2 - Appendix
- Press release Q2 - Attachment
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