CGG Announces its Q4 and Full Year 2020 Results
CGG, a world leader in Geoscience, announced today its fourth quarter and full year 2020 audited results.
Commenting on these results, Sophie Zurquiyah, CGG CEO, said:
“In the particularly challenging year of 2020, which saw the collapse of the oil & gas market across the second and third quarters, we finished the year with solid fourth quarter operational performance. During 2020, we successfully completed our exit from the Acquisition business while continuing to advance our high-end Geoscience technologies for reservoir development and production. We also delivered our Multi-client surveys in the industry’s core mature sedimentary basins and released new products while reinforcing our market leadership in Equipment. Our initiatives towards energy transition are accelerating with the development and commercialization of new business offerings, along with our announced target to achieve carbon neutrality by 2050. Looking forward, as global economies continue to progressively recover and with oil price stabilizing above $50/bbl, we expect CGG’s performance to benefit from the proactive cost reduction actions and gradually strengthen in the second half of the year, delivering positive net cash flow in 2021.“
Q4 2020: Solid Operational Performance
IFRS figures: revenue at $217m, EBITDAs at $52m, OPINC at $(58)m
Segment revenue at $283m, up 42% quarter-on-quarter and down (29)% year-on-year
Geoscience: Increased software sales and sustained activity of large and dedicated imaging centers
Multi-client: Solid prefunding rate of 171% in Q4
Equipment: Solid quarter driven by land equipment deliveries
Segment EBITDAs at $118m and Adjusted* Segment EBITDAs at $122m before $(4)m of non-recurring severance costs, a 43% margin
Segment Operating Income at $(42)m and Adjusted* Segment Operating Income at $17m before $(59)m of non-recurring charges
Group Net loss at $(100)m including $(61)m non-recurring charges on continuing activities and $(23)m non-recurring charges on discontinued activities
Group segment backlog at January 1st 2021 stands at $421m
*Adjusted indicators represent supplementary information adjusted for non-recurring charges triggered by economic downturn.
Full Year 2020: Financial performance hampered by Covid-19 pandemic impact
IFRS figures: revenue at $886m, EBITDAs at $292m, OPINC at $(173)m
Segment revenue at $955m, down (32)% year-on-year
Segment EBITDAs at $361m and Adjusted* Segment EBITDAs at $402m before $(42)m of non-recurring severance costs, a 42% margin
Segment Operating Income at $(164)m and Adjusted* Segment Operating Income at $48m before $(213)m of non-recurring charges
Group Net loss at $(438)m including $(269)m non-recurring charges on continuing activities and $(67)m non-recurring charges on discontinued activities
Liquidity of $385m and Net Debt (before IFRS 16) at $849m at year-end 2020
Q4 2020 Net Cash Flow at $(95)m including negative change in working capital of $(88)m supporting increased December sales
FY 2020 Net Cash Flow of $(247)m including $(89)m negative change in working capital and $(101)m non-recurring cash costs
Liquidity of $385m and Net debt before IFRS 16 at $849m as of December 31, 2020
CGG is in a leading position to benefit from progressive market recovery
With continuing acceleration of Covid-19 vaccinations world economies should continue to progressively recover from pandemic in 2021. Recent OPEC+ agreements support the rebalancing of supply and demand and Brent oil price has gradually recovered and stabilized above the $50/bbl threshold.
CGG will continue to invest in geoscience technologies that support clients’ prioritization towards reservoir development and production optimization. After a low Q1, our Geoscience activity will start recovering during the second half of the year on the back of solid demand for best-in-class subsurface imaging technologies and sustained activity with large NOCs. Our Multi-client business will reduce capex keeping its focus on expanding our unique footprint offshore Brazil and in the North Sea while reprocessing existing data libraries with our latest imaging technologies.
Our Equipment business should benefit from solid deliveries for land mega crews in Saudi Arabia in H1 and improved demand for its large portfolio of WING nodes onshore and GPR nodes offshore.
CGG continues to progressively develop its existing energy transition businesses, leveraging its core capabilities into other domains (Geothermal, Mining and SHM), expanding into areas where clients are growing (Carbon capture, utilization and storage) and hiring new talents.
Financial objectives: positive net cash flow in 2021
Given the context outlined above and assuming there will be no deterioration in Covid-19 pandemic and market conditions, CGG segment revenue is expected to increase by low single digits year-on-year with growth in Equipment, gradual recovery in Geoscience from H2 2021 and reduced reduced Multi-Client prefunding revenue.
Segment EBITDAs is expected to remain stable with a less favorable business mix.
Net cash flow is anticipated to be positive. The Group will continue to focus on capital discipline and cash generation. Multi-client cash capex is expected to be reduced to around $165 million with prefunding above 75% and industrial capex is expected to be stable at around $70 million. Non-recurring cash costs are expected to come down to around $(60) million.
