CGG Announces its 2020 Second Quarter Results

Source: www.gulfoilandgas.com 7/29/2020, Location: Europe

CGG, a world leader in Geoscience, announced its 2020 second quarter unaudited results.

Commenting on these results, Sophie Zurquiyah, CGG CEO, said:
“The geoscience market continued to deteriorate this quarter as clients reprioritized portfolios to factor in reductions in E&P spending. Our priority remains the safety of our employees, preservation of cash and maintaining excellent business continuity despite the global spread of Covid-19. We are swiftly taking actions necessary to align our cost structure with the new baseline, while maintaining focus on our differentiated technologies and key multi-client investments. With our strong balance sheet and solid strategy and plans, I am confident that CGG is well positioned to successfully navigate through these crises while best supporting our clients’ production optimization, reservoir evaluation and near field exploration challenges.“

Q2 2020: Revenue and EBITDAs impacted by the crises
- IFRS figures: revenue at $239m, OPINC at $(32)m, net income at $(147)m
- Segment revenue at $202m, down 41% year-on-year
- Geoscience: Resilient despite backlog decline
- Multi-client: Supported by ongoing well prefunded projects in mature basins
- Equipment: Reduced demand with some delays in deliveries due to Covid-19
- Segment EBITDAs at $68m, down 60% year-on-year, a 34% margin
- Segment operating income at $(53)m
Supplementary information
- Adjusted* Segment EBITDAs at $76m before $(7)m of Covid-19 plan costs, down 56% year-on-year, a 37% margin
- Adjusted* Segment operating income at $(5)m before $(49)m of non-recurring charges, including $(17)m fair value adjustments and limited $(24)m goodwill impairment
- *Adjusted indicators represent supplementary information adjusted of non-recurring charges triggered by economic downturn and unprecedented drop in oil price.

Sound Liquidity
- Liquidity of $546m and Net debt before IFRS 16 of $626m at June 30, 2020
- Q2 2020 Segment Free Cash Flow of $(8)m
- Q2 2020 Net Cash Flow of $(77)m, including $(25)m 2021 plan and Covid-19 plan cash costs
- H1 2020 Net Cash Flow of $(60)m, including $(54)m 2021 plan and Covid-19 plan cash costs

Aligning cost structure to the new baseline
- All saving plans (2021 plan and Covid-19) expected to generate cash costs reduction of around $35m in 2020 and $135m annualized, including around $90m of fixed cash costs
- Covid-19 plan cash expenses of around $(30)m in 2020, of which $(4)m in H1
- $(94)m of non-recurring charges were booked in Q2 2020

Global economic crisis, triggered by Covid-19 pandemic and unprecedented drop in oil price and E&P spending lead CGG to carry a full impairment test in Q2 2020 and launch cost reduction actions («Covid-19 plan»). $(94)m of non-recurring charges were booked in Q2 2020:
- $(7)m severance costs related to Covid-19 plan
- $(17)m non-cash fair value remeasurement of GeoSoftware business available for sale
- $(24)m non-cash goodwill impairment related to GeoConsulting business mainly focused on exploration and appraisal
- $(37)m non-cash remeasurement of other financial assets and liabilities mainly related to Marine Acquisition exit transaction
- $(9)m non-cash impairment of Deferred Tax Assets


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