Dutch staffing firm Brunel International announced 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.

As previously announced in its second-quarter results, the group encountered issues with a project for a water treatment plant, which it first won in 2018, leading to a one-off loss of €5.5 million.

“We replaced the general manager and rebuilt the organisation, but at the same time we saw the market for shale oil & gas experiencing a slowdown with changing clients’ behavior in their contracting model from T&M (time and material) to fixed pricing,” Brunel said.

“As a consequence, our BIS-activities in Q3 were at a very low level, causing a disbalance with our organizational capacity and resulting in significant operational losses,” Brunel said.

Brunel said that after a thorough re-evaluation of the strategic rationale of this business, it was decided to stop the BIS-activities as soon as practicable.

Until then, existing commitments, including the water treatment plant project, will be delivered on in close collaboration with the client for an “optimal outcome”.

The group added that all commitments are expected to be delivered and finalised in Q2 2020. Brunel has no similar contracts anywhere else in the world.

“We expect that the operational losses for BIS in the second half of the year will amount to €9 million,” Brunel stated. “Additionally, we will encounter one-off costs of €8 million to cease activities and speed up the finalisation of current projects.”

In its update Brunel said that its performance in the Netherlands is still hindered by the scarcity in specialised IT and Engineering talent.

“To improve profitability, we are speeding up our activities to start 2020 with a leaner organisation from top to bottom, with full focus on the newly identified growth areas. In Germany, more automotive projects are being stopped than forecasted, and although this only has a limited impact on revenue growth, it does decrease the profitability of our business due to a slightly higher bench in Q4,” the group stated.

“While we reiterate our revenue outlook for the full year and continue to expect revenue to be between €1.025 billion and €1.075 billion, our EBIT will be significantly impacted and is expected to be between €15 million and €20 million for the full year 2019.

The group will publish its third quarter results on 1 November 2019.

Brunel International NV (BRNL:AEX) set a new 52-week low during today's trading session when it reached €8.15. Over this period, the share price is down -24.59%. As of last trade the company traded at €8.25. Based on its current share price the company has a market value of €539.13 million.