Baker Hughes 3rd-quarter net falls 60% on lower-than-expected international activity
BY MELODIE WARNER
HOUSTON -- Baker Hughes third-quarter earnings fell 60% as lower international activity contributed to the oilfield services company's revenue missing consensus estimates.
"Our margins were impacted by the well-known imbalance in the North American pressure pumping business," said President and CEO Martin Craighead. "Additionally, activity was less than planned in several key geomarkets for Baker Hughes, resulting in an unfavorable mix."
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 the company had previously said it was well-positioned to take advantage of an international upturn in demand.
Baker Hughes said Friday seasonal return of activity in Canada was nearly 30% less than this time last year. Meanwhile, the collective rig count in Brazil, Colombia and Norway--all meaningful markets for Baker Hughes--was down 17% from the second quarter. The company expects activity levels in its international segments to rebound during the fourth quarter.
Baker Hughes reported a profit of $279 million, or 63 cents a share, down from $706 million, or $1.62 a share, a year earlier. Excluding items such as plant-closure costs and charges related to information-technology assets, adjusted per-share earnings fell to 73 cents from $1.18 a year ago. Revenue increased 3.2% to $5.23 billion. Analysts polled by Thomson Reuters had most recently forecast earnings of 84 cents on revenue of $5.44 billion.
Operating margin fell to 8.8% from 15.9% as total costs and expenses rose 12% to $4.77 billion. At its North American segment--its largest geographic business by revenue--revenue edged up 0.8% and the segment's pretax profit fell 52%.
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