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
Galaxy Entertainment Group (WYNN) Friday announced that it has agreed to purchase 5.3 million primary shares of Wynn Resorts Ltd. at a price of $175 a share, resulting in $927.50 million of gross proceeds to Wynn Resorts. The two sale, combined with a previous sale effectively eliminate ownership of founder and former CEO Steve Wynn in Wynn Resorts. Starbucks wants to be more efficient but it is risking the fragile loyalty of its most devoted customers. The ubiquitous chain plans a major push to get coffee lovers to use its mobile app to place their orders, but regulars prefer to buy their lattes by waiting in the queue. According to reports,... Taco Bell, the Mexican fast-food chain owned by Yum Brands Inc. (YUM), Thursday said it will start selling tortilla chips in grocery and convenience stores starting May. The chips will be available in Fire and Mild sauce packet flavors and also in a Classic flavor. "This launch of our first line...
comments powered by Disqus
Follow RTT