Baker Hughes 2nd-quarter net falls 45% on weaker North America profits
BY MELODIE WARNER
HOUSTON -- Baker Hughes (BHI) second-quarter earnings fell 45% as weaker North America profits continued to weigh on the oilfield services company's bottom line.
"Activity levels continued to rise across the Eastern Hemisphere based on strong demand in deepwater markets, particularly in Europe and Africa, as well as seasonal improvements in Russia," Chief Executive Martin Craighead said. "However, our gains in the east were more than offset by a sharp decline in Latin America resulting from reduced activity and demobilization costs in Brazil and Mexico."
Baker Hughes's North American pressure-pumping business has been challenged as energy customers pull back on drilling for natural gas and shift their production to oil-rich shale. But revenue growth from its international business has helped offset the declines in North America.
Volatile natural gas and oil prices and an overbuild of pressure-pumping capacity also have pressured profits in recent quarters.
Baker Hughes reported a profit of $240 million, or 54 cents a share, down from $439 million, or $1 a share, a year earlier. The most-recent quarter included a net charge of seven cents a share for bad-debt provisions and an inventory charge. Revenue jumped 3% to $5.49 billion.
Analysts polled by Thomson Reuters had most recently forecast per-share earnings of 65 cents on revenue of $5.26 billion. Operating margin shrank to 7.9% from 12%.
The North American segment -- its largest geographic business by revenue -- saw its pretax profit drop 41% during the quarter while revenue edged up 0.2%. The segment's adjusted operating margin shrank to 8% from 14% a year ago.
Baker Hughes said it expects a strong rebound in North America operating margins now that Canada is returning to normal activity levels.
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