CGGVeritas, the world's largest seismic surveyor, said first-quarter profit fell 7 percent because of a weaker dollar and that a vessel breakdown will cut sales in the second quarter.
Net income fell to 64 million euros ($99 million) from 69 million euros a year earlier, the Paris-based company said today. That missed the 74 million-euro median estimate of five analysts surveyed by Bloomberg News. Operating income fell 14 percent to 123.4 million euros, also missing analysts' estimate of 131 million euros.
The company's sales are mostly earned in dollars while about 15 percent of operating expenses are in euros, making it vulnerable to a drop in the dollar, which slipped 8.2 percent against the single currency in the period. In dollar terms, profit rose 5 percent to $95.5 million in the quarter.
``We confirm our 2008 objectives based on strengthening activity in the second half of the year,'' CGGVeritas said in the statement. The company said in February it expected to ``grow at least in line with the market,'' which in 2008 should expand at about 15 percent worldwide.
CGGVeritas (GA) fell as much as 7.3 percent in Paris and closed down 4.92 euros, or 2.87 percent, at 166.58 euros.
``The results are a little disappointing,'' Jean-Francois Granjon, an analyst at Oddo & Cie, said in an interview. ``The second quarter won't be very good because of seasonal weakness as well as higher costs for vessel reparations.''
Offshore oil exploration is surging as drillers embark on more costly and technologically complex projects to boost reserves, especially offshore. CGGVeritas conducts studies and sells apparatus for estimating the size of energy deposits.
CGGVeritas said a malfunction on its Symphony streamer vessel off the coast of northwestern Australia in April will cost an estimated $25 million in lost revenue and insurance during the second quarter.
``The vessel lost propulsion and the current pushed the streamers underneath,'' Chief Executive Officer Robert Brunck said in an interview after a meeting with analysts, referring to equipment used in underwater surveys. The rate the company's vessels are used in the second quarter will drop to about 70 percent from 84 percent in part due to the incident, he said.
In response to the incident, CGGVeritas is creating a marine engineering division to oversee an expanding fleet, which has doubled to 20 vessels in about two years, Brunck said.
Revenue at its Sercel seismic equipment division fell 8 percent to 189 million euros. Earnings before interest, tax, depreciation and amortization were 35 percent of sales compared with 36 percent last year. At the services division, sales were little changed 433 million euros, with an Ebitda margin of 44 percent of sales, compared with 49 percent a year earlier.
CGGVeritas in February targeted an operating margin this year of ``above 30 percent for Sercel and above 20 percent for services,'' based on a euro-dollar exchange rate of $1.45.
The surveyor was created in 2006 when Massy, France-based Compagnie Generale de Geophysique SA bought Houston-based Veritas DGC Inc. Geophysique was founded in 1931 by Conrad Schlumberger and carried out its first survey in West Africa.
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