French geophysical equipment provider CGGVeritas has reported a 2010 revenue of US$2.9 billion with an operating income of $220 million. It had a strong fourth quarter with revenue up 21% to $905 million.
For its fourth quarter performance, the company’s equipment division Sercel saw its margins reach 36%, in an equipment market characterised by increasing demand for high resolution surveys.
Also in the quarter CGG’s services margin was 5% with strong year end multi-client sales, highlighting globally increasing interest for future exploration programmes.
Strengthening seismic market and lingering marine overcapacity
The Group’s revenue for 2010 were down by 7% from 2009 levels. The year saw Sercel’s sales performance go up 17% over 2009. Services, which were impacted by events in the Gulf of Mexico and continued oversupply in the marine market, were down 12%. A low point was reached in the third quarter followed by a particularly strong seasonal effect in the fourth quarter, the company said.
New year new threats
The beginning of the year was marked by the evolution of security concerns in North Africa, piracy risks in the Indian Ocean and higher than usual operational maritime interruptions.
2011 outlook
CGGVeritas expects to grow its exploration and production spending in 2011 with exploration increasing significantly. The Group’s Capex for the year is expected to be around $600 million.
The company’s shipyard time and vessel upgrades are anticipated to impact utilisation rates of its fleet early in the year, particularly in the first quarter, before progressively strengthening them going forward.
CGGVeritas CEO, Jean-Georges Malcor commented: “I am pleased to announce that our results this quarter were above expectations based on sustained marine utilisation, solid processing performance, particularly high Sercel deliveries and record level multi-client sales, confirming the positive market signs we saw last quarter.
“For the year, our overall results reflected the continued challenging contract market conditions as the impact of marine overcapacity was prolonged by the dramatic reduction of Gulf of Mexico activity. Looking forward, Sercel should continue to deliver excellent performance while Services should see the market strengthening and progressively absorbing marine oversupply in the second half of 2011.
“With a focus on performance improvements, costs reduction and differentiation, both technological and commercial, we have launched an ambitious plan to significantly upgrade our fleet, commercialise our breakthrough marine broadband solution BroadSeis and strengthen our balance sheet as exemplified by our convertible bond issue.
“With these plans and our continuous commitment to our clients, the motivation of our people, and our dedication to HSE across all activities, I am more confident than ever that we are building a solid foundation for the future”.
