Oilfield firm Baker Hughes Co reported a $10 billion loss and lower-than-expected revenue in the first quarter on Wednesday as an 80% plunge in oil prices crushed demand for services and equipment.
Oil futures this week turned negative for the first time in history as fuel demand collapsed from the spread of the novel coronavirus and storage tanks fill up. The sudden free-fall in oil prices last month has prompted shale companies to slash spending and halt drilling activity.
Baker Hughes had warned investors last week it would take a $1.5 billion charge to earnings in the first quarter, and a $15 billion goodwill impairment charge as it reduced the long-term prospects for its oilfield and equipment unit.
Revenue of $5.43 billion for the quarter was down 3% from a year earlier and below analysts' average estimate of $5.63 billion, according to Refinitv Eikon data.
Net loss attributable to Baker Hughes stood at $10.21 billion, compared with a profit of $32 million a year earlier.
"The outlook for oil and gas demand and supply appears equally uncertain," Chief Executive Lorenzo Simonelli said in a statement.
Baker Hughes has cut its 2020 budget by over 20% from the prior year and is restructuring its operations to adjust to declining activities.
Shares were flat in premarket trading at $12.75. They're down about 50% in the year to date.
Wall Street analysts were generally encouraged by Baker Hughes' results, pointing to the company's $152 million in free cash flow.
"We continue to believe that [Baker Hughes] will emerge on the other side of these troubling times as the energy technology/services play most worth owning for the long haul," analyst from investment firm Tudor, Pickering Holt & Co wrote in a note.
Rivals Schlumberger NV and Halliburton Co also took massive charges to earnings in the quarter from writing down assets amid the double whammy of the coronavirus pandemic and slump in oil demand. This week, Halliburton said it was cutting spending by 50%, the largest reduction so far by a major oil firm.
On an adjusted basis, Baker Hughes reported profit of 11 cents a share, in line with market expectations.
(Reporting by Shradha Singh in Bengaluru; Editing by Arun Koyyur and Bernadette Baum)