Brunel (BRNL: NA), the Netherlands-based global energy staffing firm grew revenue by 9% on a like-for-like basis to €259.7 million in the third quarter of 2019 compared to the prior-year quarter.

Revenue grew strongly in the Middle East & India and Rest of World regions.

Last week Brunel published a trading update announcing that it has decided to stop its Brunel Industrial Services operations, based in Texas, US. Since 2017, BIS has worked on various construction and maintenance projects, including large projects in shale oil & gas.

“The market for shale oil & gas experienced a slowdown bringing the revenues of our Brunel Industrial Services-activities at a very low level of €2.4 million in Q3,” the company stated. “As we had built up our organisation in the past period, there was an imbalance between capacity and activities, resulting in significant operational losses of €6.5 million in Q3”.

 The group said it expects to incur operational losses for Brunel Industrial Services in Q4 of €2.5 million and one-off costs of €8 million to cease activities and speed up the finalisation of current projects.

Revenue by region

The DACH region includes Germany, Switzerland, Austria and Czech Republic. Revenue in the region was slightly impacted by the slowdown in the automotive industry. Brunel expects these circumstances to further impact revenue growth in Q4, with a slight decrease of profitability due to a higher bench in Q4.

The company said its performance in the Netherlands is still hindered by the scarcity in specialised IT and Engineering talent. To improve profitability, the group said it has adjusted the structure in Q4, to start 2020 with a “leaner organisation, with full focus on the growth areas.”

Australasia includes Australia and Papua New Guinea. The group achieved limited growth despite the low number of new projects in the Oil & Gas industry in this year. The group reported an increase in operating costs which mainly relates to increased sales activities to prepare for upcoming projects.

The Middle East & India continues its strong, double digit growth, mainly driven by the results in Qatar and Kuwait. The group saw a small decline in revenue in India. 

Rest of World includes Americas, Asia, Russia and the remaining European countries, but excludes the results from Brunel Industrial Services. Asia and Americas are the main growth drivers, following increased activities in the Oil & Gas sector. Revenue growth exceeds growth in direct headcount due to a change in the mix.

Jilko Andringa, CEO of Brunel International, commented, “Our continued operations achieved double digit growth in revenue and profitability. DACH and Middle East had another strong quarter. Growth in the Rest of the World remains high. The discontinuation of Brunel Industrial Services has a significant impact on the results this year. Together with the global leadership team, Peter de Laat and I will continue to execute the communicated strategy to achieve our multiyear goals.”

 Looking ahead, reported EBIT is expected to be between €15 million and €20 million for the full year 2019. Including Brunel Industrial Services, revenue will be between €1.02 billion and 1.07 billion.

As of last trade Brunel International traded at €8.34, 4.25% above its 52-week low of €8.00, set on 25 October 2019. Based on its current share price the company has a market value of €418.76 million.