Baker Hughes 4Q Net Falls 32% on Sharp Drop in North American Business
Baker Hughes Inc.'s fourth-quarter earnings fell 32% as the oil-field-services company posted a sharp drop in profits from its North American business.
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. Volatile natural-gas and oil prices and an overbuild of pressure-pumping capacity have also pressured profits in recent quarters.
Last month, Baker Hughes lowered its fourth-quarter outlook for North America revenue and margins, citing lower-than-expected onshore activity and continued pressure-pumping price declines.
The North American segment--its largest geographic business by revenue--saw its pretax profit drop 47% during the quarter while revenue declined 9.5%. The segment's adjusted operating margins shrank to 9% from 15% a year ago. Its December forecast was adjusted operating margin of 8.5% to 9.5%.
Baker Hughes reported a profit of $214 million, or 49 cents a share, down from $314 million, or 72 cents, a year earlier. The most-recent quarter included a charge of 14 cents a share for bad debt provisions in Latin America. Adjusted earnings from continuing operations were $1.20 a share a year ago.
Revenue fell 1.4% to $5.22 billion.
Analysts polled by Thomson Reuters had most recently forecast per-share earnings of 61 cents on revenue of $5.21 billion.
Operating margin fell to 8.3% from 10.3%.
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