UPDATE 3-CGGVeritas Q1 profit misses forecasts, shares dip
* Q1 EBIT down 18.7 percent in euros, misses forecast
* Says to cut costs, focus on "healthy" net free cash flow
* Says visibility very low for the rest of 2009
* Keeps bullish long-term outlook for seismic business
* Shares down as much as 8 percent
(Recasts with details from conference call, analysts)
By Marie Maitre and Benjamin Mallet
PARIS, May 14 (Reuters) - CGGVeritas (GEPH.PA) reported sharply lower first-quarter profits and announced "rigorous" cost cuts as oil and gas companies cut or delay spending, reducing demand for the French company's seismic surveys.
"Oil companies are doing everything to put contractors under pressure, which has totally disastrous effects in our sector," Chairman Robert Brunck told a conference call for analysts, adding though that he remained confident in the outlook for the industry in the longer term.
"I would be surprised to see a permanent and lasting collapse in oil prices in 2010, 2011 and 2012," he said.
CGGVeritas shares were down 6 percent to 11.19 euros by 1000 GMT on Thursday, adding to an 11 percent fall earlier this week, with analysts and traders citing disappointment over the quality of the earnings and the company's bleak outlook.
CGGVeritas said first-quarter operating profit fell 18.7 percent to 100 million euros ($136 million), which came well below market expectations as analysts had forecast an operating profit of 139 million euros on average.
In dollars, operating profit was down 29 percent at $131 million, said the company which is based in Paris and Houston.
Sales fell to $851 million from $873 million last year, with operating margin down to 15 percent from 21 percent.
Order backlog fell to $1.4 billion on May 1, from $1.98 billion at end-2008 on reduced demand and with clients postponing investment decisions.
FALLING SEISMIC DEMAND
In February, CGGVeritas, which has a market capitalisation of 1.9 billion euros, forecast a fall of 15-20 percent in demand for seismic imagery in 2009 and 2010, compared with 2008.
To face tough business conditions, CGGVeritas said it would implement "rigorous" cost cuts, and announced it would remove five vessels from the market in 2009. It said it would operate with less than 20 of its 27 vessels from the first half of 2010.
"Since visibility remains particularly low for the rest of the year we are implementing cost savings and adjusting capacity to strengthen our ability to deliver optimal performance and focus on our priority of a healthy net free cash flow in 2009," Brunck said.
The company, which is battling unlisted Schlumberger's (SLB.N) WesternGeco unit for leadership of the seismic services market, has a fleet of vessels towing long streamers that survey wider and deeper zones than was possible a few years ago.
Brunck said that within the next 12 months, CGGVeritas would trim costs in its core services business by 15 percent on top of a $100 million savings target he said he had already announced.
CGGVeritas had made no detailed forecasts for savings before Thursday's earnings update.
Restructuring costs may push the services business into an operating loss in the second quarter, Brunck added.
CGGVeritas's investments will also fall to $300 million in 2009 from $500 million in 2008, Brunck said. Investments were already down 21 percent to $175 million in the first quarter.
CGGVeritas, born out of the merger of Compagnie Generale de Geophysique and Veritas in 2007, recently acquired Norwegian firm Wavefield Inseis to boost its fleet of vessels. (Editing by David Cowell) ($1 = 0.7377 euro)
