CGGVeritas today its non-audited third quarter 2010 consolidated results. All 2009 results are reported before restructuring.
* Group revenue was $656m, down 10% year-on-year and up 1% sequentially on recovering multi-client sales, including Gulf of Mexico, and continued robust Sercel activity
* Group operating margin at 4% with contrasting performance:
o Sercel: margin up to 30%, primarily driven by higher land sales
o Services: negative margin due to challenging contract market conditions in marine and North America onshore, offsetting promising trends in multi-client and high-end imaging. In this continued oversupplied marine environment, vessel upgrades and planned repairs were accelerated. Together with increased transits, this drove vessel utilization rates lower in Q3
* Net income was a loss of $33 million including $13 million taxes this quarter
* Operating cash flow was $82 million including the impact of increased working capital which was mainly related to Sercel activity. After capital expenditure, including the Oceanic Vega, and after financial costs, our free cash flow decreased by $93 million
* Net debt to equity ratio at 41%
* Backlog as of October 1st was sequentially up 9% to $1.6 billion with significant long term contract awards
* Our 4th quarter is expected to benefit from increased Sercel sales and the promising multi-client trend. Operational cash flow should strengthen in the 4th quarter but not enough to compensate for the decrease in cash flow from the first nine months of the year
CGGVeritas CEO, Jean-Georges Malcor commented:
“CGGVeritas results this quarter reflect the challenging conditions that prevail during the low phase of the cycle we are going through. In this context, although our revenue was sequentially stable, our profitability was impacted by lower vessel utilization rates and difficult marine and North American land contract market conditions.
However, in recent months, we have seen promising signs of increased demand for our high-end solutions and innovative technologies. As an example, our new breakthrough broadband solution BroadSeis, which provides a remarkable step forward in the quality of marine imaging, has received a very strong and positive client response. Land and Marine multi-client sales have strengthened, Sercel again posted a very strong quarter and backlog has increased.
Our goal is to benefit from the increasing interest worldwide for our technology and expertise, while leveraging our high-end position in the progressively recovering seismic market.
Looking towards the future, we remain focused on our three strategic priorities: costs savings, operational performance and technology differentiation. We look forward to communicating our plan and progress towards these priorities during an upcoming market day which will be held in Paris on December 16th 2010.”
CGGVeritas is a leading international pure-play geophysical company delivering a wide range of technologies, services and equipment through Sercel, to its broad base of customers mainly throughout the global oil and gas industry. CGGVeritas is listed on the Euronext Paris SA and the New York Stock Exchange .
Source: CGG Veritas, November 9, 2010;