logo
Share SHARE
FONT-SIZE Plus   Neg

Baker Hughes Q1 Profit Slips, Yet Tops Estimates - Update

Oil services provider Baker Hughes Inc. (BHI) on Tuesday reported a fall in profit for the first quarter, as higher costs more than offset an 18 percent increase in revenue. Yet, earnings per share and revenues topped Wall Street estimates.

Net income attributable to Baker Hughes slipped to $379 million from $381 million. Earnings per share dropped to $0.86 from $0.87. On average, 29 analysts polled by Thomson Reuters expected earnings per share of $0.80 for the quarter. Analysts' estimates typically exclude one-time items.

Revenue increased 18 percent to $5.36 billion from $4.53 billion with improvement across all segments. Analysts estimated revenues of $5.22 billion for the quarter.

North America generated $2.86 billion in the quarter, up about 21 percent from last year. However, margins were lower than the fourth quarter due to challenges in the Pressure Pumping product line as well as supply chain challenges.

Considering the typical seasonal declines, the company's international business performed well in the quarter.

The performance of the Europe/Africa/Russia Caspian segment was exceptional with a 14 percent growth in revenue at $893 million, driven by strong results across Africa where Baker Hughes provided drilling and evaluation services on multiple high-profile exploration wells in Nigeria, Angola and Mozambique.

Costs and expenses increased to $4.73 billion from $3.89 billion with a 22 percent increase in cost of revenue.

Baker Hughes had warned last month that it expects a sequential drop in operating profit before tax for the first quarter, citing the rapidly changing market conditions in Pressure Pumping product line in North America as well as seasonality in all international markets.

The company said at that time that it continues to shift its U.S. rig activity from natural gas to oil and liquids-rich basins and other market forces. As a result, its Pressure Pumping product line is currently experiencing decreased fleet utilization, lower pricing, higher than expected personnel and logistics costs, and higher costs for critical raw materials, such as gel, the oil field serviced provider said then.

The company said today that it is improving the distribution network and increasing supplies of critical raw materials in order to address supply chain challenges. Baker Hughes is also enhancing the utilization of its fleets.

Martin Craighead, Baker Hughes President and CEO, said, "We expect to realize significant benefits from these improvements in the second half of 2012; however, it is clear that the overall market is experiencing pricing pressure that is likely to extend throughout 2012."

BHI closed on Monday at $41.07, up from the prior close of $40.46, on a volume of 7.43 million shares.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
Shares of Volkswagen AG declined around 3 percent in the morning trading, after the German automotive giant reported Tuesday lower profit and revenues in its first quarter, mainly reflecting weak passenger car volumes and negative currency impacts. Further, the company reiterated its outlook for fiscal 2016, expecting a decline in revenues. For Coca-Cola, patriotism is the new way for marketing and minting profit. The beverage giant joined with United Service Organizations Inc. or USO to bring out limited-edition patriotic Coca-Cola cans at the Memorial Day weekend to honor U.S. Service Members. The Coca-Cola cans are available at convenience stores now through July 4th. The holiday throng seeking to take a flight out to their preferred destinations at the at New York's Kennedy International Airport ahead of the Memorial Day holiday were in for a rude shock. Technology played a spoilsport, as a computer system broke down Sunday evening at a terminal, causing flight delays and cancellations that resulted in manual check-in process for thousands of holiday passeng
comments powered by Disqus
Follow RTT