August 1, 2014 / 6:35 AM / in 3 years

UPDATE 1-CGG speeds up job and cost cuts as Q2 profit plunges

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PARIS, Aug 1 (Reuters) - 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 fleet.

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 Regan)

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