We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Baker Hughes (BHI) Incurs Wider-Than-Expected Loss in Q4
Read MoreHide Full Article
Oilfield services player Baker Hughes Incorporated incurred wider-than-expected loss in fourth-quarter 2016. Postponement of projects and lesser work in the North Sea and Brazil were responsible for the quarterly loss. Cost-reduction initiatives partially limited the downside.
Loss per share from continuing operations (excluding special items) came in at 30 cents, much wider than the Zacks Consensus Estimate of a loss of 12 cents as well as the year-ago loss of 21 cents.
Revenues of $2,410 million came in above the Zacks Consensus Estimate $2,369 million. This was attributable to higher works in the U.S. onshore operation. The top line, however, plunged from the year-ago level of $3,394 million.
Fourth-Quarter Segment Performance
The company operates through five business segments – North America, Latin America, Europe/Africa/Russia Caspian, Middle East/Asia Pacific and Industrial Services.
Of Baker Hughes' total quarterly revenue, North America, Europe/Africa/Russia/Caspian, Middle East/Asia Pacific and Latin America accounted for 32.2%, 20.3%, 28.5% and 9.3%, respectively. The remainder was generated by the Industrial Services segment.
North America: The company generated revenues of $775 million from this continent, much lower than $1,137 million in the year-ago comparable quarter. The underperformance stemmed from a challenging competitive landscape, but was partially negated by more U.S. onshore operations and seasonal improvements in Canada.
This segment incurred adjusted operating loss before tax of $56 million, narrower than a loss of $127 million in the year-ago period. The narrower loss may be attributed to continuous cost-reduction efforts.
Latin America: The business unit recorded revenues of $225 million as against $428 million in the October to December quarter of 2015.
The segment reported profit before tax of $13 million compared with $15 million in the prior-year quarter.
Lower activities, especially in Brazil, led to the year-over-year fall.
Europe/Africa/Russia Caspian: From this unit, the company generated $490 million in revenues as against $723 million in the fourth-quarter 2015.
The operating loss from this segment was $19 million, which compared unfavorably with profit of $48 million in the last quarter of 2015.
Deferral of projects, along with lesser works in the North Sea, was responsible for the plunge in both the top line and the bottom line.
Middle East/Asia Pacific: Baker Hughes came out with revenues of $687 million as against $820 in the prior-year quarter.
The unit’s profit of $91 million was considerably higher than $31 million in the October to December quarter of 2015, mainly due to cost-reduction initiatives.
Expense
Depreciation and amortization expenses were $245 million, down 6.5% sequentially and 41.1% year over year. The decrease was owing to reduced capital spending and asset impairments.
Liquidity
At the end of the fourth quarter, Baker Hughes had $4,572 million in cash and cash equivalents, while long-term debt was $2,886 million. In the reported quarter, capital expenditures totaled $106 million, which reflects a decrease of $108 million or 50% from the fourth quarter of 2015. The decline in capital expenditure was primarily owing to lower activity levels and focus on capital discipline.
Share Performance
The company displayed strong price performances over the last three months. During the aforesaid period, Baker Hughes shares improved more than 16% compared with only 9% gain for the Zacks categorized Oil Refining & Marketing industry.
Guidance
During the first half of 2017, the company projects ramp up of onshore activities in North America. However, the international market might see a decline in activities amid persistent pricing pressure.
Apart from Baker Hughes, the other two Big Four oilfield service players that have recently reported fourth-quarter results are Schlumberger Limited (SLB - Free Report) and Halliburton Company (HAL - Free Report) . Weatherford International plc – the last of the Big Four oilfield service players – is expected report earnings on Feb 1, 2017.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Baker Hughes (BHI) Incurs Wider-Than-Expected Loss in Q4
Oilfield services player Baker Hughes Incorporated incurred wider-than-expected loss in fourth-quarter 2016. Postponement of projects and lesser work in the North Sea and Brazil were responsible for the quarterly loss. Cost-reduction initiatives partially limited the downside.
Loss per share from continuing operations (excluding special items) came in at 30 cents, much wider than the Zacks Consensus Estimate of a loss of 12 cents as well as the year-ago loss of 21 cents.
Revenues of $2,410 million came in above the Zacks Consensus Estimate $2,369 million. This was attributable to higher works in the U.S. onshore operation. The top line, however, plunged from the year-ago level of $3,394 million.
Fourth-Quarter Segment Performance
The company operates through five business segments – North America, Latin America, Europe/Africa/Russia Caspian, Middle East/Asia Pacific and Industrial Services.
Of Baker Hughes' total quarterly revenue, North America, Europe/Africa/Russia/Caspian, Middle East/Asia Pacific and Latin America accounted for 32.2%, 20.3%, 28.5% and 9.3%, respectively. The remainder was generated by the Industrial Services segment.
North America: The company generated revenues of $775 million from this continent, much lower than $1,137 million in the year-ago comparable quarter. The underperformance stemmed from a challenging competitive landscape, but was partially negated by more U.S. onshore operations and seasonal improvements in Canada.
This segment incurred adjusted operating loss before tax of $56 million, narrower than a loss of $127 million in the year-ago period. The narrower loss may be attributed to continuous cost-reduction efforts.
Latin America: The business unit recorded revenues of $225 million as against $428 million in the October to December quarter of 2015.
The segment reported profit before tax of $13 million compared with $15 million in the prior-year quarter.
Lower activities, especially in Brazil, led to the year-over-year fall.
Europe/Africa/Russia Caspian: From this unit, the company generated $490 million in revenues as against $723 million in the fourth-quarter 2015.
The operating loss from this segment was $19 million, which compared unfavorably with profit of $48 million in the last quarter of 2015.
Deferral of projects, along with lesser works in the North Sea, was responsible for the plunge in both the top line and the bottom line.
Middle East/Asia Pacific: Baker Hughes came out with revenues of $687 million as against $820 in the prior-year quarter.
The unit’s profit of $91 million was considerably higher than $31 million in the October to December quarter of 2015, mainly due to cost-reduction initiatives.
Expense
Depreciation and amortization expenses were $245 million, down 6.5% sequentially and 41.1% year over year. The decrease was owing to reduced capital spending and asset impairments.
Liquidity
At the end of the fourth quarter, Baker Hughes had $4,572 million in cash and cash equivalents, while long-term debt was $2,886 million. In the reported quarter, capital expenditures totaled $106 million, which reflects a decrease of $108 million or 50% from the fourth quarter of 2015. The decline in capital expenditure was primarily owing to lower activity levels and focus on capital discipline.
Share Performance
The company displayed strong price performances over the last three months. During the aforesaid period, Baker Hughes shares improved more than 16% compared with only 9% gain for the Zacks categorized Oil Refining & Marketing industry.
Guidance
During the first half of 2017, the company projects ramp up of onshore activities in North America. However, the international market might see a decline in activities amid persistent pricing pressure.
Zacks Rank
Baker Hughes currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Apart from Baker Hughes, the other two Big Four oilfield service players that have recently reported fourth-quarter results are Schlumberger Limited (SLB - Free Report) and Halliburton Company (HAL - Free Report) . Weatherford International plc – the last of the Big Four oilfield service players – is expected report earnings on Feb 1, 2017.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>