Baker Hughes Earnings Hit by Restructuring Charges

For Illustration only; Image Credit: Baker Hughes (File Photo)
For Illustration only; Image Credit: Baker Hughes (File Photo)

Shares of energy services firm Baker Hughes slipped on Wednesday after reporting second-quarter results that fell short of Wall Street estimates as it shifts its business to technology and services that help customers transition to a lower-carbon world.

Baker Hughes Co swung to a profit from a loss a year-ago, but was down 9% from the prior quarter and missed analysts forecasts. Earnings were hurt by $125 million in impairment and restructuring charges.

Shares slipped 1% to $19.86. Brent crude futures were up about 2% on Wednesday to $70.77 per barrel.

While oil demand has rebounded from the pandemic lows seen last year, spending on oilfield services has only inched higher as energy companies hold spending and production flat.

The recovery in oil demand may face a threat from new strains of COVID-19, but spending and activity should gain momentum through the year as the business environment improves, Chief Executive Officer Lorenzo Simonelli said in a statement.

Baker Hughes is rebranding itself as an energy transition company, focusing on technology and shedding some traditional oilfield businesses. Revenue at its oilfield services unit was down about 2% year-over-year, while oilfield equipment revenue dipped 8% over that period.

In oilfield services, Simonelli projected high single-digit to low double-digit percentage growth in international markets in the second half of the year and modest growth in North American markets. He anticipates companies will add around 50 rigs in North America through the end of the year, with private companies picking up activity at current price levels.

Adjusted net income attributable to the company was $83 million, or 10 cents per share, in the quarter ended June 30, compared with $91 million, or 12 cents per share, in the first quarter. Wall Street analysts had anticipated earnings of 16 cents per share, according to Refinitiv IBES.

Revenue of $5.142 billion for the quarter topped forecasts of $4.948 billion, according to Refinitiv.

Overall, Wall Street analysts said the results were neutral to positive, pointing to stronger profit margins and free cash flow.

Investment firm Tudor Pickering Holt & Co called the report "solid" and lauded Baker's continued focus on technological innovation and the energy transition. (Reporting by Arunima Kumar in Bengaluru and Liz Hampton in Denver; Editing by Aditya Soni, David Evans and Nick Zieminski)

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