Final hours! Save up to 55% OFF InvestingProCLAIM SALE

Baker Hughes misses profit estimate amid shortages, inflation

Published 01/23/2023, 07:07 AM
Updated 01/23/2023, 10:41 AM
© Reuters. The logo of Baker Hughes (BKR) is seen in this image provided July 21, 2020. Baker Hughes/Handout via REUTERS

By Arunima Kumar and Liz Hampton

(Reuters) -Baker Hughes Co on Monday reported results that missed Wall Street's fourth-quarter profit estimate but offered an upbeat outlook on rising demand for oil and natural gas.

The oilfield services industry grew last year on higher activity in response to elevated oil prices. But the pace remained slower than pre-pandemic levels as producers held tight to spending plans amid component shortages and supply chain snarls.

"In 2023, the global economy is expected to experience some challenges under the weight of inflationary pressures and tightening monetary conditions," Chief Executive Officer Lorenzo Simonelli said in a statement.

Still, Baker Hughes offered an upbeat outlook for 2023 as China reopens from COVID-19 restrictions and European demand drives tighter natural gas and liquefied natural gas (LNG) markets.

Shares were up a fraction in early trading at $31.29. They are up about 15% from a year ago.

Growth in its oilfield services and equipment business is trending higher in international markets as North America has leveled off, Simonelli said on Monday. It anticipates double-digit spending growth globally, with increases in North America driven by cost inflation.

Adjusted net income stood at $381 million, or 38 cents per share, for the three months ended Dec. 31, compared with an average analyst estimate of 40 cents per share, according to Refinitiv data.

Baker Hughes restructured its business last year into two segments, one focused on oilfield equipment and services and another on industrial and energy technology. It reported $682 million in restructuring and impairment charges for 2022.

Sales in its Oilfield Services & Equipment business were up 12% year over year to $3.6 billion, while revenue in its Industrial & Energy Technology group rose 1% from the prior year to $2.3 billion.

Total company fourth-quarter revenues of $5.9 billion also missed Wall Street estimates of $6.1 billion, according to Refinitiv data. It expects revenues of between $5.3 billion to $5.7 billion for the current quarter, and full-year revenues of $24 billion to $26 billion.

© Reuters. The logo of Baker Hughes (BKR) is seen in this image provided July 21, 2020. Baker Hughes/Handout via REUTERS

Analysts were upbeat on the firm's adjusted EBITDA of $947 million, which beat forecasts of around $925 million.

"EBITDA outpaces expectations despite lighter revenues, with sizable book-to-bill supporting the outlook," an analyst for Tudor, Pickering, Holt & Co wrote.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.