(AOF) – CGG’s net profit in 2023 is $16 million, a decline of 63%. Operating income was $138 million, a margin of 12% and a decline of 23%. The Ebitda of the group’s activities was $400 million, down 8% year-on-year, with a lower margin rate of 36% linked to the unfavorable mix of activities. On the other hand, the turnover of the group’s activities in 2023 stood at $1.125 billion, an increase of 21%. Operating cash flow from 2023 activities stood at $408 million, up 18% year-on-year.
Operating cash flow from activities includes a positive change in working capital and provisions of $3 million in 2023.
In terms of outlook, CGG anticipates activity turnover for 2024 close to that of 2023. In addition, Ebitda for 2024 activities will benefit from a favorable mix.
“The positive net cash flow for 2024 is forecast at a level similar to that of 2023 taking into account the impact, for the last year, of the contractual commitment to use vessels,” indicates the oil services group.
Additionally, market demand for CGG’s core businesses is expected to continue to grow at a mid-single-digit average annual rate through 2026.
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Key points
– World leader in technology and high-performance scientific computing in geosciences;
– Turnover of $949 million coming 80% from the Geoscience branch and the rest from the Multi-client and equipment divisions;
– “People, data, technology” business model: sustainability of the group through positive self-financing whatever the market conditions thanks to “asset-light”, strengthening in activities with high self-financing generation, balance of assessment and availability and diversification in the energy transition;
– Split capital, Sophie Zurquiyah being general manager and Philippe Salle chairman of the board of directors of 11 members;
– Tight balance sheet with, at the end of March, $2 billion of capital employed compared to a net debt, at the rating raised in April, of $994 million giving a leverage effect of 2.4 and $301 million in liquidity.
Challenges
– 2025 strategy of transformation into a technology company, with leading positions in subsurface imaging, cloud, data exploitation, sensors and acquisition systems: annual revenue growth of 13%; turnover distributed between monitoring & observation for 37%, digital science for 35% and energy transition;
– Innovation strategy at the source of 30% of annual turnover
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boosted by R&D accounting for 6.2% of turnover, with a portfolio of nearly 1,000 patents and focused on computing power and image quality,
– based on an Earth Data library with a book value of $291 million
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– Environmental strategy with 2 deadlines, 2030 and 2050: 50% reduction in CO2 emissions (vs. 2020) then total neutrality / increase in the rate of use of renewable energies to 50% then 100 (vs. 30% in 2020) / efficiency of energy use / launch of credit facilities aligned with ESG criteria;
– Strengthening the monitoring & observation division through the acquisition of Geocamp and ION’s software activity;
– Return of investments in “Beyond the core” (HPC & Cloud solutions, Data Hub, computing capacities, partnerships in hydrogen and decarbonization), aiming for a 25% share of revenues by 2030: acceleration of Generative AI for HPC and Cloud solutions
and s
success of structural monitoring solutions in the United States and entry into the health sector.
Challenges
– Sensitivity of activity to oil & gas exploration and of stock market valuation to changes in interest rates;
– After a 37% increase in turnover and a net loss reduced to $16 million at the end of March, outlook for 2023: growth in demand for Geoscience and Earth data, sustained terrestrial activity, hence an increase of 15 to 20% of turnover and an operating margin of 39 to 41%;
– Elimination of the dividend.
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Biogas to green activities
Obtained through the decomposition of waste, it falls into the category of green energy. It is part of the strategy of many countries, particularly in Europe, to reduce their dependence on hydrocarbon imports. Oil groups have strong ambitions in the field, as two recent operations reveal. The British BP took over the American Archaea Energy for 4.1 billion dollars. Then, the Anglo-Dutch Shell announced the acquisition of the Danish Nature Energy for $2 billion. These operations display high valuation levels, highlighting the strong potential of the sector. TotalEnergies had already taken a stake in the American Clean Energy Fuels Corp in 2018, of which it now holds 19%. It recently joined forces with Veolia to recover biomethane from waste treatment facilities.