(Adds details, background)
PARIS Aug 1 French seismic surveyor CGG
said it will step up plans to cut spending and jobs
after delays in awarding contracts by clients and pressure on
prices led to a plunge in second-quarter revenue and earnings.
The group said it would reduce its workforce by more than 10
percent, or over 1,000 jobs, and slim down its marine fleet to
13 vessels from 18 by the end of this year - two years earlier
than previously planned.
It also pledged to cut industrial capital expenditure by 10
percent this year and took a $230 million asset writedown.
"Given the current weak market conditions characterized
notably by the unpredictable capex spending of our clients,
delays in awarding projects and pressure on prices, we
anticipate 2014 to remain difficult," Chief Executive
Jean-Georges Malcor said in a statement on Friday.
Second-quarter revenue dropped 33 percent to $689 million,
while earnings before interest and tax (EBIT) fell 76 percent to
$31 million, CGG said.
Malcor said, however, that he expected a sequential
improvement in results in the second half, and confirmed a goal
to improve the EBIT margin by 400 basis points in 2016.
Top oil companies around the world are reining in capital
spending in the face of shareholder protest at the way costs
have soared without a matching increase in production. Seismic
companies like CGG and oil services providers are feeling the
pinch as a result.
In February, CGG recorded a net loss for 2013 and booked an
$800 million charge for the planned reduction in its vessel
CGG also on Friday announced a deal under which it will fold
its North American Land Contract assets and activities into
Geokinetics, one of the largest independent international land
and shallow water seismic players, in exchange for a minority
stake in the company.
CGG said the deal would secure Geokinetics' position as a
market leader in the North America Contract business.
(Reporting by Andrew Callus; Editing by Leigh Thomas and James