H1 2017: Disappointing half year, first signs of recovery
Brunel International (unaudited) |
|
||||||||
P&L amounts in EUR million |
|
||||||||
Q2 2017 |
Q2 2016 |
Change % |
H1 2017 |
H1 2016 |
Change % |
||||
Revenue |
188.9 |
231.2 |
-18% |
a |
385.3 |
469.6 |
-18% |
b |
|
Gross Profit |
39.7 |
47.7 |
-17% |
86.9 |
95.6 |
-9% |
|||
Gross margin |
21.0% |
20.6% |
22.6% |
20.4% |
|||||
Operating costs |
40.8 |
40.2 |
2% |
c |
82.4 |
79.0 |
4% |
d |
|
EBIT |
-1.2 |
7.5 |
-116% |
4.6 |
16.6 |
-73% |
|||
EBIT % |
-0.6% |
3.2% |
1.2% |
3.5% |
|||||
Average directs |
9,201 |
9,336 |
-1% |
9,093 |
9,629 |
-6% |
|||
Average indirects |
1,496 |
1,500 |
0% |
1,478 |
1,526 |
-3% |
|||
Ratio direct / indirect |
6.2 |
6.2 |
6.2 |
6.3 |
a -19 % at constant currencies
b -19 % at constant currencies
c 2 % at constant currencies
d 4 % at constant currencies
Brunel Global Business (unaudited) |
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P&L amounts in EUR million |
|
||||||||
Q2 2017 |
Q2 2016 |
Change % |
H1 2017 |
H1 2016 |
Change % |
||||
Revenue |
81.1 |
119.8 |
-32% |
a |
163.2 |
248.3 |
-34% |
b |
|
Gross Profit |
9.2 |
13.3 |
-30% |
18.7 |
27.3 |
-31% |
|||
Gross margin |
11.4% |
11.1% |
11.5% |
11.1% |
|||||
Operating costs |
11.3 |
12.7 |
-11% |
c |
22.7 |
25.0 |
-9% |
d |
|
EBIT |
-2.0 |
0.6 |
-446% |
-3.9 |
2.3 |
-270% |
|||
EBIT % |
-2.5% |
0.5% |
-2.4% |
0.9% |
|||||
Average directs |
4,418 |
4,656 |
-5% |
4,351 |
4,911 |
-11% |
|||
Average indirects |
510 |
598 |
-15% |
507 |
613 |
-17% |
|||
Ratio direct / Indirect |
8.7 |
7.8 |
8.6 |
8.0 |
a -33 % at constant currencies
b -36 % at constant currencies
c- 12 % at constant currencies
d -12 % at constant currencies
Revenue
Revenue in Q2 decreased by 32% year on year, and 1% compared to Q1. The regions Americas, Middle East and Russia achieved growth compared to Q1, offset by a decline in Australia and South East Asia. In Australia and South East Asia, significant projects were largely completed in the course of Q2. We are working on several initiatives to speed up our diversification. We expect that some of these initiatives will start contributing in the second half of the year.
Gross profit
The gross margin increased slightly as a result of a change in the mix, both across the globe and between activities.
Operating costs
Cost savings in our existing business are partly offset by investments in new initiatives, as a result operating costs in Q2 decreased by 11%.
Brunel Europe (unaudited) |
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P&L amounts in EUR million |
||||||||
Q2 2017 |
Q2 2016 |
Change % |
H1 2017 |
H1 2016 |
Change % |
|||
Revenue |
107.8 |
111.4 |
-3% |
222.1 |
221.3 |
0% |
||
Gross Profit |
30.4 |
34.4 |
-11% |
68.2 |
68.4 |
0% |
||
Gross margin |
28.2% |
30.9% |
30.7% |
30.9% |
||||
Operating costs |
27.3 |
24.8 |
10% |
54.9 |
49.3 |
11% |
||
EBIT |
3.2 |
9.6 |
-67% |
13.3 |
19.1 |
-30% |
||
EBIT % |
3.0% |
8.6% |
6.0% |
8.6% |
||||
Average directs |
4,783 |
4,680 |
2% |
4,742 |
4,718 |
1% |
||
Average indirects |
934 |
859 |
9% |
921 |
870 |
6% |
||
Ratio direct / Indirect |
5.1 |
5.4 |
5.1 |
5.4 |
Brunel Germany (unaudited) |
||||||||
P&L amounts in EUR million |
||||||||
Q2 2017 |
Q2 2016 |
Change % |
H1 2017 |
H1 2016 |
Change % |
|||
Revenue |
52.0 |
52.9 |
-2% |
108.3 |
102.5 |
6% |
||
Gross Profit |
16.4 |
18.9 |
-13% |
37.3 |
35.8 |
4% |
||
Gross margin |
31.5% |
35.7% |
34.4% |
34.9% |
||||
Operating costs |
13.5 |
12.6 |
6% |
27.2 |
24.5 |
11% |
||
EBIT |
2.9 |
6.3 |
-54% |
10.1 |
11.3 |
-11% |
||
EBIT % |
5.6% |
11.9% |
9.3% |
11.0% |
||||
Average directs |
2,274 |
2,174 |
5% |
2,265 |
2,160 |
5% |
||
Average indirects |
423 |
405 |
4% |
412 |
416 |
-1% |
||
Ratio direct / Indirect |
5.4 |
5.4 |
5.5 |
5.2 |
Revenue
On 1 April, the new law came into effect and to comply we had to renew our union trade agreement. Some of our customers have suspended us as supplier until we had our new union trade agreement in place, what caused a temporary hiccup in the growth. We finalized the renewal at the end of July. This renewed agreement offers us a strong competitive advantage. Revenue per working day increased by 3%. Headcount at 30 June 2017 is 3% above last year’s headcount.
|
Q1 |
Q2 |
Q3 |
Q4 |
FY |
2017 |
65 |
59 |
65 |
60 |
249 |
2016 |
62 |
62 |
66 |
62 |
252 |
Gross Profit
Gross margin adjusted for working days is 34.8% (2016: 35.7%). Additional price pressure is mainly due to volumetric customers.
Operating costs
Operating costs in H1 increased with 11% mainly driven by strengthening the commercial organization to facilitate further growth.
Brunel Netherlands (unaudited) |
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P&L amounts in EUR million |
||||||||
Q2 2017 |
Q2 2016 |
Change % |
H1 2017 |
H1 2016 |
Change % |
|||
Revenue |
46.6 |
49.2 |
-5% |
94.5 |
100.9 |
-6% |
||
Gross Profit |
12.3 |
13.4 |
-9% |
26.6 |
28.5 |
-6% |
||
Gross margin |
26.3% |
27.3% |
28.2% |
28.2% |
||||
Operating costs |
11.6 |
10.2 |
14% |
23.5 |
20.7 |
13% |
||
EBIT |
0.6 |
3.2 |
-81% |
3.2 |
7.7 |
-59% |
||
EBIT % |
1.3% |
6.5% |
3.3% |
7.6% |
||||
Average directs |
2,181 |
2,173 |
0% |
2,153 |
2,224 |
-3% |
||
Average indirects |
437 |
381 |
15% |
437 |
381 |
15% |
||
Ratio direct / Indirect |
5.0 |
5.7 |
4.9 |
5.8 |
Revenue
The revenue development is a mix of a decline in freelancers (impact -10%) and growth in own employees (impact +5%). Q2 2017 had one less working day compared to last year. Revenue per working day decreased by 4%. The growth in Engineering and Legal is more than offset by the decline in the other business lines. Headcount at 30 June 2017 is 2% above last year’s headcount.
Working days
|
Q1 |
Q2 |
Q3 |
Q4 |
FY |
2017 |
65 |
61 |
65 |
63 |
254 |
2016 |
63 |
62 |
66 |
64 |
255 |
Gross Profit
The gross margin adjusted for working days is 27.5% (2016: 27.3%). The increase in gross margin due to the change in mix is largely offset by a lower productivity.
Operating costs
The operating costs increased due to continuous investment in sales force and technology.
The effective tax rate in the first half year of 2017 is 75.6%. Due to the seasonality in Europe our tax rate is higher in the first half of the year. For the full year, we project the effective tax rate to come down significantly.
Reference is made to our 2016 Annual Report (pages 57 – 75). 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 decreased to EUR 127 million, due to the seasonality and the dividend payment in June.
The Netherlands will return to revenue growth from Q3 onwards, and Germany will continue to grow. For Global Business we expect revenue to remain flat for the next couple of months until the impact of our initiatives becomes visible. There is some uncertainty around the timing of the first revenues from these initiatives, but we expect to achieve an EBIT of at least EUR 15 million for the full year.
Jan Arie van Barneveld, CEO of Brunel International N.V.: “We knew the first half year would be tough, but we have reached the bottom of the trough sooner than expected. Our actual performance has been improving day by day. With Europe on a growth track, and all the initiatives in Global Business, I’m confident that we will return to sustainable growth pretty quickly” .