This is a correction of the announcement from 07:30 04.03.2016 CET. Reason for the correction: References of some tables were missing and incorrect, apologies!
Amsterdam, 4 March 2016
Key points Q4 2015
- Revenue down by 19% to EUR 287 million
- Gross margin up to 20.1% from 18.4%
- Operating costs down by 14% to EUR 40 million; 21% down in Energy
- EBIT down by 7% to EUR 18 million
Key points FY 2015
- Revenue down by 11% at EUR 1,229 million
- Gross margin at 18.7% from 18.0%
- Operating costs flat at EUR 174 million, down by EUR 4 million in constant currencies
- EBIT down by 25% to EUR 56 million
- Net profit at EUR 38 million
- Proposed dividend EUR 0.75 per share (2014: EUR 0.70) and a super dividend of EUR 0.75 per share
| Brunel International (unaudited) | ||||||
| P&L amounts in EUR million | ||||||
| Q4 2015 | Q4 2014 | Change % | FY 2015 | FY 2014 | Change % | |
| Revenue | 287.2 | 356.7 | -19%a | 1,228.9 | 1,386.6 | -11%b |
| Gross Profit | 57.6 | 65.6 | -12% | 230.0 | 249.0 | -8% |
| Gross margin | 20.1% | 18.4% | 18.7% | 18.0% | ||
| Operating costs | 40.0 | 46.5 | -14%c | 173.9 | 174.3 | 0%d |
| EBIT | 17.6 | 19.1 | -7% | 56.1 | 74.7 | -25% |
| EBIT % | 6.1% | 5.3% | 4.6% | 5.4% | ||
| Average directs | 10,604 | 12,041 | -12% | 10,894 | 12,101 | -10% |
| Average indirects | 1,539 | 1,663 | -7% | 1,601 | 1,624 | -1% |
| Ratio direct / Indirect | 6.9 | 7.2 | 6.8 | 7.5 | ||
a -22% at constant currencies
b -16% at constant currencies
c -16% at constant currencies
d -3% at constant currencies
Q4 2015 results
Revenue
Two top line trends are visible in the fourth quarter: the European top line continued to increase, with a strong increase in The Netherlands and Germany back to growth after three consecutives quarters of revenue decrease. Adjusted for the additional working days, revenue growth for Europe is 8%. The top line in the Oil & Gas division however continued to decrease, in line with the expectations and following the negative sentiment in Oil & Gas.
Gross Profit
As a result of the change in business mix with relatively high margins in Europe compared to Oil & Gas, the gross margin improved by 1.7ppt to 20.1%.
Operating Costs
We have been able to reduce the operating costs by 14% in the fourth quarter. Our Global IT implementation has been rolled out progressively, enabling us to improve service levels and become more efficient and cost effective. In addition, following the downturn in the Oil & Gas division, we have taken various fine tuning measures including redundancies to align the organisation with the reduced business volume. On top of that, our marketing spend has been reduced.
EBIT
The same trend is visible in the profitability, where EBIT in Europe grew significantly, while the drop in Oil & Gas was strong too. Overall EBIT decreased by 7% to EUR 18 million in the fourth quarter.
Q4 2014 results by division
| Brunel Oil & Gas (unaudited) | ||||||
| P&L amounts in EUR million | ||||||
| Q4 2015 | Q4 2014 | Change % | FY 2015 | FY 2014 | Change % | |
| Revenue | 174.3 | 254.2 | -31%a | 813.7 | 981.7 | -17%b |
| Gross Profit | 20.2 | 32.6 | -38% | 96.3 | 118.0 | -18% |
| Gross margin | 11.6% | 12.8% | 11.8% | 12.0% | ||
| Operating costs | 15.1 | 18.9 | -20%c | 67.3 | 68.5 | -2%d |
| EBIT | 5.0 | 13.7 | -63% | 29.0 | 49.5 | -41% |
| EBIT % | 2.9% | 5.4% | 3.6% | 5.0% | ||
| Average directs | 5,808 | 7,473 | -22% | 6,333 | 7,624 | -17% |
| Average indirects | 649 | 785 | -17% | 707 | 771 | -8% |
| Ratio direct / Indirect | 9.0 | 9.5 | 9.0 | 9.9 | ||
a -35% at constant currencies
b -23% at constant currencies
c -23% at constant currencies
d -8% at constant currencies
The Oil & Gas division consist of the Energy division and the Projects division.
| Brunel Energy (unaudited) | ||||||
| P&L amounts in EUR million | ||||||
| Q4 2015 | Q4 2014 | Change % | FY 2015 | FY 2014 | Change % | |
| Revenue | 150.7 | 210.1 | -28%a | 696.6 | 806.0 | -14%b |
| Gross Profit | 17.6 | 28.4 | -38% | 83.8 | 100.4 | -16% |
| Gross margin | 11.7% | 13.5% | 12.0% | 12.5% | ||
| Operating costs | 14.0 | 17.7 | -21%c | 63.1 | 63.8 | -1%d |
| EBIT | 3.6 | 10.8 | -66% | 20.7 | 36.6 | -43% |
| EBIT % | 2.4% | 5.1% | 3.0% | 4.5% | ||
| Average directs | 5,506 | 6,954 | -21% | 5,905 | 7,013 | -16% |
| Average indirects | 626 | 757 | -17% | 683 | 745 | -8% |
| Ratio direct / Indirect | 8.8 | 9.2 | 8.6 | 9.4 | ||
a -33% at constant currencies
b -21% at constant currencies
c -24% at constant currencies
d -8% at constant currencies
Revenue
The downward trend in the Energy division continued in the fourth quarter. Our operations in the Americas and Europe & Africa have felt the downturn in the oil price first, since the main up stream projects are initiated in these regions and therefore project delays, capex cuts and headcount reductions by our clients are felt here in an early stage of the Oil & Gas project cycle. Since Oil & Gas projects are in a later development stage in South East Asia and Australia, we expect a delayed headcount reduction in these regions. In the Middle East however, projects generally have a cost advantage, causing the projects to continue and leaving headcount and top line relatively flat.
Gross Profit
Driven by positive foreign exchange results, the gross margin has been incidentally relatively high in Q4 2014. The current gross margin is more in line with our general business.
Operating Costs
Following the negative top line trend, we have strongly focused on reducing our overhead in the Energy division. Headcount has been reduced significantly compared to December 2014, ending at 166 indirect employees less in December 2015. Both the more efficient operations in our back office due to continued investments in the IT structure and the reduced workload due to the reduced number of contractors enabled us to run our operations more effectively at lower costs. Therefore, we were able to bring our overhead down by 24% in constant currencies.
The full impact of the restructuring will be seen from Q1 2016 onwards.
EBIT
The fact that the EBIT dropped to EUR 4 million (65%), is partly caused by the fact that part of the cost savings have only become effective during the fourth quarter.
| Brunel Projects (unaudited) | ||||||
| P&L amounts in EUR million | ||||||
| Q4 2015 | Q4 2014 | Change % | FY 2015 | FY 2014 | Change % | |
| Revenue | 23.7 | 44.1 | -46%a | 117.0 | 175.6 | -33%b |
| Gross Profit | 2.6 | 4.1 | -38% | 12.5 | 17.6 | -29% |
| Gross margin | 10.8% | 9.4% | 10.7% | 10.0% | ||
| Operating costs | 1.1 | 1.2 | -6%c | 4.2 | 4.6 | -10%d |
| EBIT | 1.4 | 2.9 | -51% | 8.3 | 13.0 | -36% |
| EBIT % | 6.0% | 6.6% | 7.1% | 7.4% | ||
| Average directs | 303 | 520 | -42% | 428 | 611 | -30% |
| Average indirects | 23 | 27 | -17% | 24 | 26 | -8% |
| Ratio direct / Indirect | 13.5 | 19.1 | 17.8 | 23.5 | ||
a -45% at constant currencies
b -33% at constant currencies
c -4% at constant currencies
d -11% at constant currencies
Revenue
One of the main projects in the Projects division has been completed in the fourth quarter, leaving only one major project running from Q1 2016 onwards. By the start of 2015 one of the three main projects reduced in seize significantly, having the most impact year on year in the fourth quarter.
EBIT
Despite the volume reduction and following the overhead cost, we were still able to realise an EBIT margin of 6%.
Due to the reduced size of the Projects division, we will not report this division separately anymore going forward.
Brunel Europe (unaudited) | ||||||
| P&L amounts in EUR million | ||||||
| Q4 2015 | Q4 2014 | Change % | FY 2015 | FY 2014 | Change % | |
| Revenue | 112.9 | 102.5 | 10% | 415.3 | 404.9 | 3% |
| Gross Profit | 37.1 | 33.0 | 13% | 133.4 | 131.1 | 2% |
| Gross margin | 32.9% | 32.2% | 32.1% | 32.4% | ||
| Operating costs | 23.8 | 25.1 | -5% | 99.0 | 95.7 | 4% |
| EBIT | 13.4 | 7.9 | 69% | 34.4 | 35.4 | -3% |
| EBIT % | 11.8% | 7.7% | 8.3% | 8.8% | ||
| Average directs | 4,796 | 4,568 | 5% | 4,561 | 4,477 | 2% |
| Average indirects | 890 | 878 | 1% | 894 | 853 | 5% |
| Ratio direct / Indirect | 5.4 | 5.2 | 5.1 | 5.2 | ||
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 | ||||||
| Q4 2015 | Q4 2014 | Change % | FY 2015 | FY 2014 | Change % | |
| Revenue | 50.8 | 48.6 | 4% | 196.4 | 201.7 | -3% |
| Gross Profit | 18.4 | 17.8 | 3% | 70.1 | 73.4 | -5% |
| Gross margin | 36.2% | 36.7% | 35.7% | 36.4% | ||
| Operating costs | 11.9 | 12.8 | -7% | 50.7 | 49.3 | 3% |
| EBIT | 6.5 | 5.0 | 30% | 19.4 | 24.1 | -19% |
| EBIT % | 12.8% | 10.3% | 9.9% | 11.9% | ||
| Average directs | 2,139 | 2,164 | -1% | 2,074 | 2,171 | -4% |
| Average indirects | 426 | 449 | -5% | 439 | 428 | 3% |
| Ratio direct / Indirect | 5.0 | 4.8 | 4.7 | 5.1 | ||
Revenue
The business in Germany is back on the growth track, breaking a three quarter negative revenue trend. Adjusted for two additional working days, revenue increased by 1%. Our sales organisation is optimising the use of our IT infrastructure and management has become stable and has found the right growth path again. After a difficult start of the year, headcount has shown a continuous growth pattern from May onwards.
Gross Profit
Gross margin was relatively stable compared to Q4 2014.
Operating Costs
Operating costs were down compared to last year by 7%, mainly as a result of lower staff costs, driven by a reduced number of indirect headcount.
EBIT
Driven by the top line growth in combination with the overhead reduction, EBIT for the quarter increased by 30% to EUR 7 million.
| Brunel Netherlands (unaudited) | ||||||
| P&L amounts in EUR million | ||||||
| Q4 2015 | Q4 2014 | Change % | FY 2015 | FY 2014 | Change % | |
| Revenue | 54.2 | 46.4 | 17% | 188.4 | 175.4 | 7% |
| Gross Profit | 16.9 | 13.3 | 27% | 55.7 | 50.7 | 10% |
| Gross margin | 31.1% | 28.7% | 29.6% | 28.9% | ||
| Operating costs | 9.9 | 10.2 | -3% | 40.3 | 38.9 | 4% |
| EBIT | 6.9 | 3.1 | 125% | 15.4 | 11.8 | 31% |
| EBIT % | 12.8% | 6.6% | 8.2% | 6.7% | ||
| Average directs | 2,317 | 2,068 | 12% | 2,143 | 1,978 | 8% |
| Average indirects | 378 | 350 | 8% | 370 | 348 | 6% |
| Ratio direct / Indirect | 6.1 | 5.9 | 5.8 | 5.7 | ||
Revenue
The Netherlands had its best quarter in the history of Brunel and the highest profitability in a quarter since 2007. Adjusted for one additional working day, revenue increased by 15%. Further headcount growth was realised in the IT, Finance and Legal business lines, while the Engineering headcount development was relatively flat during the year.
Gross Profit
The gross margin improved by 2.7ppt to 31.1% in Q4 2015, mainly driven by one additional working day and improved market conditions compared to Q4 2014.
Operating Costs
Operating costs were in line Q4 2015.
EBIT
The leverage effect of the strong headcount and revenue growth, in combination with margin improvement and flat overhead, drove EBIT to increase by 72% to EUR 14 million, reaching an EBIT margin of 12.8%.
Effective tax rate
In 2015 the effective tax rate decreased from 35.1% to 33.6%, mainly as a result of tax adjustments relating to prior years.
Cash position
The December 2015 cash balance amounted to EUR 180 million, mainly driven by strong cash flows, partly as a result of the slowing down of the Oil & Gas division, freeing up cash.
Dividend
At the current level of activities, a cash position of EUR 80 million at year end is sufficient to support our business and pay out dividend. As a result, at 31 December 2015 we have around EUR 100 million of excess cash. We decided not to distribute this entire amount to be able to act in case strategic opportunities arise in the near future. Therefore we propose an additional super dividend of EUR 0.75 per share, on top of the EUR 0.75 of profit distribution.
Outlook
We expect the growth in The Netherlands to continue strongly and the growth in Germany to improve further. Given the negative downward headcount development in 2015 in the Energy division, we expect the negative revenue trend to continue in 2016. The revenue in the Projects division will strongly reduce next year, predominantly after the second quarter.
Jan Arie van Barneveld, CEO of Brunel International N.V.: "We are very satisfied with the results in our business in The Netherlands: highest headcount and revenue in the history of Brunel is a great milestone. We have put a lot of effort to optimise the sales organisation and are happy to safeguard the results of the investments in the growth in number and quality of our consultants. We are in the driver seat to keep this momentum going. In addition, we believe Germany's way back on the growth track is structural and will improve further.
In our Energy business we have strategically restructured the operations in various regions and are optimising our organisation on the back of our global IT infrastructure. We are confident that these measures prepared us for the new reality in the Oil & Gas markets."
For full article and its appendix, please see attached pfd files.
