Interview with the CEO
IN 2014 WE DEMONSTRATED OUR ABILITY TO ADAPT QUICKLY AND WE WILL CONTINUE IN 2015.
How did implementation of your transformation plan go in 2014?
With the market turning out to be much more difficult than expected, we decided to accelerate and intensify the transformation plan we launched at the end of 2013. Despite a reduction in volume demand, our Equipment Division gained market share and reduced its breakeven point. In our Acquisition Division, we sharply reduced our fixed costs and downsized our marine fleet to 13 3D vessels. We drastically restructured our airborne activity, sold off our land business in North America and consolidated our stake in our Ardiseis operations in the Middle East. Our Geology, Geophysics & Reservoir (GGR) Division continued to show profitable growth and represented 45% of our overall activity in 2014. Finally, we made a significant cut in support function costs and reduced our Group headcount by 12%.
In this context, what steps did CGG take in terms of financial management?
Right from the start of the year, we adopted a dynamic strategy to manage our debt situation. This enabled us from April onwards to refinance a large share of our debt
and extend its maturity. As a result, we have no major debt installments due before 2019 and our financial covenants have been amended.
What do you think of the operating performance of the divisions in 2014?
The Equipment Division showed strong resilience thanks to efficient cost management, its manufacturing flexibility and its deployment of our new products. The difficult
market conditions affected our Acquisition Division throughout the year. Despite this context, I would like to emphasize the good performance of our marine, land and
The growth in the revenue and profitability of GGR validates our strategy. Activity was strong in all of this Division’s Business Lines and particularly Multi-Client & New Ventures due to the commercial success of our StagSeisTM program in the Gulf of Mexico. The combined levels of activity for Subsurface Imaging, GeoSoftware, GeoConsulting and Data Management Services exceeded expectations in terms of financial performance.
What consequences does the fall in oil prices have on CGG?
The difficult market conditions we have been experiencing since late 2013 and the fall in oil prices will continue to have an impact on the Group in 2015, with limited industry demand for new seismic data. In this climate, we have already begun a new phase in our transformation plan by immediately implementing a cost-savings and CAPEX reduction program, most notably involving a further reduction in our marine fleet to 11 vessels. In 2014 we demonstrated our ability to adapt quickly. We will continue this process in 2015 and pursue our strategy to reposition CGG towards the Geosciences. I remain confident in our ability to be ready for the next market upturn.
Chief Executive Officer