Quarterly results strongly impacted by very low volumes.
- Revenue down to $313m due to change in perimeter and depressed market conditions
- GGR: after a strong Q4, very low level of multi-client after-sales, weighing on operating margin
- Equipment: sales and margin highly impacted by very low volumes
- Contractual Data Acquisition: a transitional quarter with low but stabilizing marine prices
- EBITDAs1 at $27m
- Operating Income1 at $(81)m
Execution of Transformation Plan well on track
- 3D marine fleet downsized to 5 vessels at the end of Q1, as scheduled
- Good ramp-up of marine multi-client commitments, with 70% of vessel capacity dedicated in Q2 and 60% in Q3
- Operating Cost reduction plan on track
- Capex tightly monitored
- Successful capital increase and French RCF extension completed
Strong cash generation
- Free Cash Flow1 at $118m versus $(20)m last year, mostly driven by positive change in working capital, good execution of the Plan and tight cost management
- Net debt at $2,102m corresponding to a 3.8x leverage ratio, for a year-end net debt targeted below $2.4bn
- Divestment of Multi-Physics Business Line underway
1Figures before Non-Recurring Charges (NRC) related to the Transformation Plan
Commenting on these results, Jean-Georges Malcor, CGG CEO, said:
“As we have already indicated, we have been navigating this quarter in a very depressed market. Our clients are reacting strongly to the prevailing very unfavorable oil prices by continuing to significantly reduce their capital expenditure and headcounts, and this has had a strong impact on our activities. This environment has mostly penalized Sercel and our multi-client after-sales, although the latter had a very good fourth quarter in 2015.
In this context, we are staying focused on what is within our control and in particular operational and HSE performance, adaptation of the Group and delivery of our Transformation Plan, tight control of costs and Capex, and stringent cash management. As a result of this and a positive change in working capital this quarter, we were able to post a positive free cash flow, showing a strong improvement compared to the first quarter of 2015.
Our successful 350 million euro capital increase in February 2016 safeguards the Company’s liquidity. It will enable us, as we announced, to finance our Transformation Plan which we are implementing with vigor and determination and put the Group in the best position for when the market bounces back. We recently received the relevant authorizations for our staff reduction plans and our offshore fleet is now operating with five vessels.
While we continue to expect a depressed environment for the whole year, we should fully benefit from our Transformation Plan in the second half. We remain fully committed to refocusing on our high added-value Geoscience activities and actively managing our cash situation and our balance sheet. We confirm that we are aiming to reach a net debt of less than 2.4 billion dollars by the end of 2016.”
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