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Netherlands – After fraud and profit prop Brunel International shares slump

01 March 2013

Dutch recruiter Brunel International (BRI:AEX) today posted a +7% rise in revenue at €312 million during the fourth quarter, following growth in Europe, particularly in Germany. But the firm, which operates in energy and oil & gas markets, reported a fraud which sent the share price down sharply.

The firm found evidence of fraud at its US office, forcing the recruiter to take a €9.7 million charge as financial results had been overstated. Jan Arie van Barneveld, CEO of Brunel International, said one employee inflated revenue to make margins look better. Revenue was manipulated for operations in the United States, Canada, South America, Chad and Angola, he said.

Gross profit in the quarter also fell -9% to €50.2 million with the gross margin decreasing to 16.1% from 18.9% a year ago. Earnings before income, taxes and amortization (EBITA) fell by over half (-56%) to €8.7 million.

Mr van Barneveld said: “Brunel experienced a difficult quarter as a result of control issues and incidental costs. For me this is a disappointment. At the same time the business and the underlying trend of both revenue and profitability remained very good. There has been slight growth in the Netherlands. Our business in Germany and other European countries continued to grow strongly.

“According planning the Australian offshore projects activities decreased in Q4 and this has been more than offset by strong growth in the traditional Energy business. Despite all the issues Brunel’s business developed well.”

Revenue in the Netherlands fell -2% to €40.6 million which the firm blames on a decline in the IT sector. In Germany, revenue grew +20% to €47.5 million in the quarter, following strong demand in the automotive and mechanical engineering industries.

In other European countries, including Austria, Poland and Switzerland, revenue rose by a total of +6% to €8.7 million. Belgium, which relies on the banking sector, saw revenue fall -3%.  Brunel’s Oil & Gas division posted a +7% rise in revenue at €215.5 million.

Today’s announcement prompted a -21% fall in the company’s share price this morning with the firm setting a new 52-week low at €30.04. Based on its stock price, Brunel has a market value of €924.75 million. 

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