CGG announced today its non-audited 2015 third quarter results
Commenting on these results, Jean-Georges Malcor, CGG CEO, said:
“In a very challenging market, our good cash performance this quarter is the result of the cost and capex reduction measures taken since the end of 2013 in the context of our Transformation Plan which aims at transforming CGG from a seismic acquisition company into an integrated geoscience company.
Anticipating market conditions that continue to deteriorate in Q4 and that could remain at such levels for longer, we intend to strengthen this strategy which has been implemented over the last two years. This new major step in our transformation will mainly translate into the resizing of our marine fleet to five vessels, two thirds of their capacity being dedicated to multi-client programs. Looking forward, this action will allow our contractual data acquisition activity to represent less than 15% of our consolidated revenue, thereby reducing the Group's exposure to this cyclical, highly competitive and high capital-intensive business. This adjustment of our fleet and the cost-reduction measures will result in the cut of around 13% of job positions worldwide. This new phase in our Transformation Plan is being submitted for the approval of our employee representatives to be implemented during the first half of 2016. It triggers $950 million non-cash costs already booked in our Q3 accounts and around $200 million cash costs to be booked in the future.
We plan to finance the Group needs, notably related to the Transformation Plan, through disposal of non-core assets and equity offering or sale of a minority interest.
This new phase will allow us to build a rebalanced company supported by our unique positions in Equipment, in Multi-Client, in Imaging and Reservoir and by our technology expertise in Data Acquisition. CGG should remain resilient all along the downturn of the cycle to become strongly cash-generative when the market bounces back.”
CGG sold its Canadian onshore Multi-Client Library, on October 31, 2015.
Third Quarter 2015 Results:
- Revenue at $470m, stable sequentially
- Operating income, before Non-Recurring Charges (NRC), at $4m
- Group EBIT, before NRC, at $15m with positive contribution from Equity Income mainly driven by the SBGS Joint-Venture
- EBITDA at $122m, and positive Free Cash Flow before NRC at $22m
- Following the strong deterioration of market conditions and the reduction in CGG’s fleet, assets impairment & write-off and Non-Recurring Charges of $1,015m booked in Q3:
- $500m split between $365m of Marine goodwill impairment and $135m of additional impairments, mainly vessels related
- $450m write-off mainly related to non-allocated GGR goodwill
- $48m depreciation of our deferred tax assets on past losses
- $17m other restructuring costs, mainly related to redundancies
- Net Income at $(1,074)m after NRC
- Backlog at $821m as of October1st, 2015. As of today, marine fleet coverage is at 92% in Q4 2015. Indicator no longer relevant in 2016, as the fleet will be mainly dedicated to Multi-Client activity
Decision to Implement in Q3 a New Segment Reporting
- New segmentation with no impact at consolidated level
- Creation of a new segment “Non-Operated Resources” sheltering marine idle assets and Group restructuring costs
- GGR segment now includes Marine capital employed dedicated to Multi-Client activity
- Data Acquisition segment now strictly limited to contractual revenues
CGG is a fully integrated Geoscience company providing leading geological, geophysical and reservoir capabilities to its broad base of customers primarily from the global oil and gas industry. Through its three complementary business divisions of Equipment, Acquisition and Geology, Geophysics & Reservoir (GGR), CGG brings value across all aspects of natural resource exploration and exploitation.
CGG employs over 8,500 people around the world, all with a Passion for Geoscience and working together to deliver the best solutions to its customers.
CGG is listed on the Euronext Paris SA (ISIN: 0000120164) and the New York Stock Exchange (in the form of American Depositary Shares. NYSE: CGG).