FILE PHOTO: A screen displays the logo for Baker Hughes on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 24, 2019. REUTERS/Brendan McDermid
July 31, 2019
By Nishara Karuvalli Pathikkal
(Reuters) – General Electric Co’s oilfield services arm, Baker Hughes, reported a better-than-expected profit, helped by higher LNG markets activity and a rise in international demand for oilfield services, sending its shares up more than 5%.
Revenue from the company’s oilfield services segment, which constitutes a majority of its operations, rose 14% to $3.26 billion in the second quarter, led by growth in the Middle East, Asia Pacific and Europe.
Last week, bigger rivals Schlumberger NV and Halliburton Co also posted higher quarterly revenue from regions outside North America, benefiting from an uptick in international activity that helped make up for lower sales to U.S. producers reluctant to spend.
Analysts at Tudor, Pickering, Holt & Co in a note titled “whether you prefer Timex or Rolex, BHGE reliability becoming like clockwork” called the results from Baker Hughes “mighty fine” and said the quarter checks all the requisite boxes.
The company also generated $355 million of free cash flow in the quarter, a reversal from the surprise outflow posted in the first quarter that sent shares tumbling 8.5%.
Baker Hughes reported a 34% surge in orders in its turbomachinery and process solutions business due to increasing activity in the market for liquefied natural gas projects.
Global LNG demand hit a record last year, led by growth in China. According to projections by the International Energy Agency, with demand expected to grow about 4% a year through 2024, developers could make final investment decisions (FID) later this year to add more new export capacity.
Chief Executive Officer Lorenzo Simonelli said in a statement that the company’s LNG market segment would benefit when more projects move towards positive FID. “The liquefied natural gas new-build cycle is a strong positive for our company,” he added.
The company’s adjusted net income more than doubled to $104 million, or 20 cents per share, in the second quarter, beating analysts’ estimate of a profit of 19 cents per share .
Total revenue rose 8% to $5.99 billion, beating estimates of $5.81 billion.
Shares of the company rose 5.6% to $25.89 in premarket trading.
(Reporting by Nishara Karuvalli Pathikkal; Editing by Maju Samuel)
