CGG Veritas Reports 26% Drop In Earnings

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On May 14, 2009, CGG Veritas(CGV Quote) reported that its net income plunged 26.0%, reflecting lower demand. Net income for the quarter stood at $70.70 million or $0.46 per ADS from $95.50 million or $0.68 per ADS in Q1 FY08. However in terms of Euros, the company's net income declined 15.6% to EUR 54.00 million or EUR 0.35 per share from EUR 64.00 million or EUR 0.46 per share a year ago. The latest quarterly results beat the consensus estimate of $0.70 per ADS.

Net operating revenues decreased 2.5% to $851.20 million from $872.80 million, hurt by declining Sercel revenue. Operating revenue from Sercel stood at $201.10 million, down 28.6% from $281.60 million due to lower marine sales. Services' operating revenue improved 6.5% to $688.70 million from $646.40 million, boosted by the addition of Wavefield, higher vessel utilization, and strong processing performance. Within the services, marine contract revenue increased 56.7% to $373.00 million from $238.00 million, while land contract revenue edged down 14.3% to $132.00 million from $154.00 million in Q1 FY08. In addition, processing and imaging revenue grew 4.1% to $101.00 million from $97.00 million, led by strong demand for the high end depth imaging technologies, such as CBM and RTM. However, multi-client revenue plummeted 47.8% to $82.00 million from $157.00 million, as multi-client marine and land revenues dropped 40.7% and 69.2%, respectively.

As on May 1, 2009, CGV's backlog stood at $1.40 billion, hurt by reduced market demand.

Net operating cash flows reduced 54.0% year-over-year to $122.30 million. Moreover, global Capex declined 21.0% to $175.00 million in Q1 FY09.

The company has been implementing cost reduction programs across the organization, and anticipates a disciplined capital spending to address the challenging market conditions. Additionally, it plans to remove three 3D vessels and one 2D vessel from the market in 2009.