French seismic contractor CGG announced additional cost reduction plans and further downsizing of its fleet as it falls victim to deterioration in market conditions.
In the fourth quarter 2014 (Q4 2014), CGG generated revenues of $ 906 million, down 5 percent year-on-year and up 31% sequentially. Full year revenue was $3.095 billion, down 18 percent, compared to $3.766 billion in 2013.
For the three months ended December 31, 2014, CGG recorded a loss of $667 million / €510 million, after non-recurring charges (NRC). EPS was negative at $(3.78) / €(2.88). This is compared to a loss of $810 million with negative earnings per share of $ 4.59 or € 3.38 for the same period in 2013.
Full year earnings after NRC was negative $1.147 million, compared to negative $691 million at the end of 2013.
After minority interests, Net Income attributable to the owners of CGG was negative at $(1,154) million/€(866) million. EPS was negative at $(6.52) / €(4.89).
Total non-recurring charges for the full year were $939 million ($643 million in the fourth quarter), $697 million related to impairments and restructuring costs and the rest related to write-offs.
Commenting on these results, Jean-Georges Malcor, CGG CEO, said: “Even in the context of a strongly deteriorating market, CGG delivered good operational results in the fourth quarter of 2014, thanks to an excellent contribution by our Equipment and GGR divisions, with record sales from our multi-client surveys driven particularly by the success of our StagSeis program in the Gulf of Mexico. We generated $187m in free cash flow and reduced our debt leverage to 2.4x EBITDA.
The transformation plan CGG launched at the end of 2013 and accelerated in 2014, has led to a close to 12% reduction in the company’s headcount, the reduction of its fleet from 18 to 13 vessels and the lowering of our breakeven point.
“Taking into account the reduced client activity due to the very strong fall in oil prices at year-end and in line with our portfolio rebalancing strategy, we have decided to further reduce our fleet to 11 vessels in 2015 and to launch an additional cost savings and CAPEX reduction plan,” says Malcor.