Baker Hughes Posts First Sequential Revenue Gain in Two Years -- Update
January 26 2017 - 2:33PM
Dow Jones News
By Austen Hufford
Baker Hughes Inc. said revenue rose sequentially in its latest
quarter for the first time in two years, as energy prices
stabilized.
General Electric Co. is currently working to combine its
oil-and-gas business with Baker Hughes to create a publicly traded
energy powerhouse. Thursday, Baker Hughes said the regulatory
review process is proceeding as planned and that it continues to
expect a mid-2017 close.
For Baker Hughes, the 2.4% third-quarter to fourth-quarter
revenue gain was due to increased activity in North America,
better-than-expected seasonal year-end product sales and pockets of
growth internationally, mostly in the Middle East.
Still, for the first half of 2017, Baker Hughes said it expects
"more severe" activity declines in its offshore markets
internationally, particularly deep water. It expects onshore
revenue in North America to increase as customers increase
activity.
Energy companies have been hit in recent years by the decline in
prices. Only in recent quarters have prices begun to stabilize.
On a year-over-year basis, revenue declined across all of the
company's units.
The Organization of the Petroleum Exporting Countries and
Russian officials said Sunday they were making good progress on
their pledges to cut back crude-oil production and raise global
prices.
On Thursday, Baker Hughes Chief Executive Martin Craighead said
on a call with analysts that he sees a "disconnect" between OPEC's
production cut announcements and what his company is seeing on the
ground in the Middle East. "We've seen no pullback that would, kind
of correlate if you will, to the announcement on a production cut,"
he said, noting rising Middle East revenue and unchanged production
goals from many customers.
Still, on a year-over-year basis, revenue declined across all of
the company's units.
In all, Baker Hughes reported a loss of $417 million, or 98
cents a share, compared with a year-earlier loss of $1.03 billion,
or $2.35 a share. The year-earlier quarter includes a large
impairment and restructuring charge. Excluding that and other
items, the adjusted per-share loss was 30 cents, compared with a
year-earlier adjusted per-share loss of 21 cents. Revenue slumped
29% to $2.4 billion.
Analysts expected an adjusted per-share loss of 11 cents and
revenue of $2.37 billion, according to Thomson Reuters.
Angie Sedita, an analyst at the investment bank UBS, said the
profit miss was largely driven by tax rate fluctuations.
Shares fell 0.9% in afternoon trading.
--Dan Molinski contributed to this article.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
January 26, 2017 14:18 ET (19:18 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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