Sercel Q1 Results Revealed

Total revenue for Sercel was EUR189 million ($282 million), down 8% in EUR and up 5% in US dollars. Internal sales were especially high during the quarter representing 19% of Sercel total sales.

Operating Income was EUR60 million ($90 million), with a 32% operating margin, compared to EUR69 million ($91 million) and a 34% margin a year ago. Without the adverse effect of the $/EUR exchange rate during the quarter, the operating margin would be 35%.

EBITDAs was EUR66 million ($99 million), with a 35% EBITDAs margin, compared to EUR74 million ($97 million) and a 36% margin last year.

Revenue for Services was EUR433 million ($646 million), stable in EUR and up 16% in $ supported by strong contract performance and an 84% fleet utilization rate partially offset by lower multi-client sales.

Operating Income was EUR89 million ($133 million), with a 21% operating margin, compared to EUR101 million ($133 million) and a 24% margin a year ago based on stronger contract sales and lower contributions from the high margin multi-client business. Without the adverse effect of the $/EUR exchange rate during the quarter, the operating margin would be 22%.

EBITDAs was EUR190 million ($284 million), with a 44% EBITDAs margin compared to EUR210 million ($276 million) and a 49% margin last year.

In Q2 we plan to demobilize our Arctic crews as every year. We also expect a lower marine utilization rate based on various factors. These include planned shipyard maintenance during seasonal transits, a return of vessels for defective maritime equipment and a loss of propulsion incident on the Symphony offshore Australia at the end of April that is still under assessment. At this time, we estimate that the impact of the Symphony incident on operating income could be above $25 million.

We confirm our 2008 objectives based on strengthening activity in the second half of the year. Seismic equipment deliveries will continue to increase throughout 2008, fueled by Sercel's record backlog. In Services, the marine utilization rate is expected to return to high levels in Q3 and Q4 and we expect library sales to increase particularly in Q4, driven by the timing of licensing rounds.

Looking forward we expect the seismic market for equipment and services to grow along with increasing E&P spending of the oil and gas companies.


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