CGG SA (CGG), the world’s largest seismic surveyor of oilfields, fell the most in more than four months in Paris trading after reporting a first-quarter loss.
The shares tumbled as much as 11 percent to 10.885 euros, the most since Dec. 17, and were at 10.975 euros as of 12:17 p.m. local time. The stock has fallen 13 percent this year, compared with a 3 percent gain in the benchmark CAC 40 index.
“Results were significantly weaker than expected,” Raymond James Financials Inc. analyst Bertrand Hodee said today in a note. The marine market “appears to have over-capacity” with an emerging trend of about 5 percent lower average prices for the year than 2013.
CGG turned to a net loss of $39 million from a profit of $79 million a year earlier, according to a statement. The backlog fell to $1.2 billion at the end of March from $1.35 billion three months earlier.
“The seismic market remains flattish in a global context of reduced exploration and development spending,” Chief Executive Officer Jean-Georges Malcor said in today’s statement. CGG has started reducing its fleet of vessels.
The surveyor has suffered a dip in demand as oil explorers defer orders for seismic studies to preserve cash. CGG deploys equipment that drags behind ships to measure sound waves and find underwater oil and gas deposits.
CGG reported a negative free cash flow of $152 million in the quarter, compared with $148 million a year ago, according to today’s statement. The margin for group earnings before interest and taxes shrank to 2 percent from 15 percent.
CGG in December announced a plan to change the composition of its business through 2016, including a 25 percent cut in the capacity of its marine fleet. That will reduce the proportion of sales generated from its acquisition division to less than 35 percent from 43 percent, according to a presentation.
The plan through 2016 is “on track,” the company said today.
To contact the reporter on this story: Tara Patel in Paris at email@example.com