Brunel, the Netherlands-based global energy staffing firm, reported third-quarter revenue was down 1% and down 2% organically.

Gross profit decreased by 8% year-on-year in Q3 2024 and 10% organically. Underlying EBIT decreased by 8%, or 17% organically.

Brunel’s Supervisory Board appointed Peter de Laat as CEO as of 1 October 2024, succeeding Jilko Andringa. Brunel announced in July that Andringa would leave the company to pursue another professional endeavour.

“Due to the current uncertainty in many parts of the world, our clients are taking longer to make investment decisions and start new projects, which is impacting our revenue and profitability in the short term,” de Laat said in a press release. “At the same time, this uncertainty is beneficial for the longer term, as many companies want to remain flexible, and the strong pipeline of projects gives us confidence in meeting our long-term targets.”

“In anticipation of lower activity levels in the second half of this year, we successfully implemented and fully executed a comprehensive cost reduction plan during this quarter, delivering annual cost savings of €20 million,” de Laat continued. “We have established a leaner overall cost base, already leading to a decrease of our current cost levels. Our focus remains on optimising resources across the business amidst changing conditions and securing long-term profitability.”

“During the third quarter, the already challenging automotive market in the DACH region further weakened,” de Laat said. “Since we have shifted our focus earlier this year to industries that offer opportunities, we have seen our revenue increase in those industries. However, it will take some time before this growth compensates for the decline in other industries.”

Operating costs reduced by 8% YoY in Q3 2024, 7% organically, as a result of the execution of the cost reduction plan during this quarter.

Revenue by Geography

The DACH region includes Germany, Switzerland, Austria and the Czech Republic. Revenue per working day decreased by 8.4%. The gross margin, adjusted for working days, was 33.0% in Q3 2024 (Q3 2023: 37.2%). The decrease in gross margin was due to lower productivity (bench) and slightly more margin pressure from current market conditions.

Revenue per working day in The Netherlands decreased by 1.2%. The gross margin, adjusted for working days, was 24.7% in Q3 2024 (compared to 27.0% in Q3 2023). The decrease in gross margin is the result of a relative increase in freelancers compared to employees and lower productivity, mainly due to higher illness.

Australasia includes Australia and Papua New Guinea. Demand in conventional energy and mining sectors has continued to drive growth, achieving a 20% increase in revenue year-on-year. The gross margin decreased to 9.5% (Q3 2023: 10.8%), largely due to a temporary change in the group’s client mix.

The Middle East & India region include Qatar, Kuwait, Dubai, Iraq and India. The 1% decline in revenue is mainly attributed to the completion of conventional energy projects in Dubai and India, though this was partly offset by steady growth in infrastructure and conventional clients in Qatar. The overall gross margin remained stable at 13.9% (Q3 2023:14.0%).

The Americas includes Brazil, Canada, the US, Guyana and Surinam. Sustained growth in the conventional energy and mining sectors, particularly in our key markets of the US and Canada, led to a 7% increase in revenue. The group maintained its margins while focusing on operational efficiency, resulting in a 7% reduction in operating costs.

Asia includes Singapore, China, Hong Kong, South Korea, Taiwan, Japan, Indonesia, Thailand and Malaysia. Ongoing project delays in China and Singapore at fabrication yards impacted the company’s quarterly results. Additionally, an unfavourable shift in the client mix across the region affected gross margins.

The Rest of the World region includes Taylor Hopkinson, Belgium and other energy activities in Europe. Several major projects in the renewables sector were completed during the quarter, with new projects expected to start early next year. The group’s energy activities in Europe remained relatively stable, benefiting from improved margins due to a favourable change in the client mix.

Looking ahead, the group said the impact of the downward trend in the automotive industry in the DACH region and project delays in Asia on Brunel’s overall performance will increase in Q4.

“The delays in starting new projects in Asia have impacted our performance in Q3 slightly more than expected earlier,” de Laat said. “Based on our growing pipeline of projects scheduled to start in Q1 2025, we are optimistic about positive revenue development in Asia next year.”

“In The Netherlands, clients adjusted their risk appetite towards freelancers using the opportunity to employ them directly. Our pipeline remains healthy, with several new projects won across all regions, including providing inspection services. These new projects will start contributing in the course of Q1 2025.”

“We will continue investing in our global IT and digital infrastructure to support our efficiency and client delivery,” de Laat said. “Our new cloud-based front office sales system, enhanced with AI, will be fully implemented in the remaining regions early next year. Considering all the circumstances and developments, I am confident that with a lean cost base and strategic positioning against important megatrends, we are prepared for a successful start of 2025.”

 Brunel shares last traded at €8.90, up 0.45% on the day and 7.10% above its 52-week low of €8.31, set on 12 September 2024. The company has a market cap of €448.09 million.