Brunel Q2 2020 results

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Overig advies 31/07/2020 10:11
Impact COVID-19 less than expected, strong free cash flow

Key points Q2 2020
Revenue decrease ongoing business limited to 8% (yoy) to EUR 223 million
Restructurings in DACH region and Americas to align to lower activity level and prepare for end date government relief in Germany
Good performance in the Netherlands with strict bench and cost management
Cost savings (14%) exceeding gross profit decline (-12%), annualised savings of EUR 30 million
EBIT amounted to EUR 0.8 million (Q2 2019: EUR -0.5 million)

Key points H1 2020
Revenue decrease ongoing business 1% (yoy) to EUR 480 million
EBIT amounted to EUR 9 million
Strong free cash flow of EUR 22 million, cash position at EUR 111.5 million

Jilko Andringa, CEO of Brunel International N.V.: “During these tough times, which have significantly impacted our society, Brunel has shown to be very resilient. The impact of COVID-19 on our business in the quarter was less than initially expected. Our main priority was and remains the health and safety of our people, and I am proud to see that our employees and specialists continue to work diligently to serve our clients to the best of their ability, at our clients, from our offices where possible, or remote.

In Q2, we continued to see project delays, reductions and cancellations due to the pandemic. The DACH region has seen the biggest impact and reports a loss in the quarter, which is also the result of seasonality and the first impact of a restructuring. The Netherlands is flattening out and shows improved profitability versus last year, through bench and cost management. Being active in a cyclical business, Brunel has great cost agility and can adjust costs levels where needed and we are prepared to organise ourselves as agile as needed in the coming quarters.

At the same time, we continue to execute our diversification strategy, and our sales teams continue to find new specialised client solutions that will help grow our business and increase our margins in the foreseeable future. The current circumstances bring even more internal awareness for the need to diversify and to become more specialised.

With the duration of the pandemic unknown, Brunel will continue to support its employees, specialists, clients and other stakeholders where possible, while maintaining a healthy financial basis and ensuring continued profitability and future returns to our shareholders. The second half of this year will be tough, but with the many great Brunellers around the world, we are ready to show our unique combined strength, short, medium and long term.”

The COVID-19 outbreak and the sharp decline in oil price had an impact on the financial results in all our regions in Q2. Especially in April, when countries’ lockdown measures were at the peak, we noted a strong decrease in activities at our clients, leading to a decrease in revenue in most regions. The revenue decline started to ease in May and June.

The Group’s Q2 revenue excluding BIS decreased by 8%, mainly due to the decrease in the DACH region. The Middle East & India and Rest of the World regions showed growth year-on-year in Q2. For H1, we see revenue growth in the regions Australasia, Middle East & India, Rest of the World and the Americas.

We have taken various cost saving measures in most of our regions, to make sure we organise ourselves as flexible as we can, while in the regions in which we continue to experience revenue growth, we retain the capacity to grasp new opportunities. In the DACH region and the Americas, where we expect the revenue decline to continue, we have executed our restructuring plans to adjust our organisations. As a result of the cost saving initiatives that are already executed, the Group’s operating costs in Q4 will be 15% lower compared to Q1, annualised a cost saving of EUR 30 million.

The Q2 EBIT for the Group was higher than last year. Excluding BIS the EBIT decreased by EUR 4.7 million (-83%), mainly due to the decrease in the DACH region of EUR 4.9 million. In absolute amounts, the other regions achieved small decreases or slight growth in EBIT compared to Q2 2019.
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