Oilfield services provider Baker Hughes Co missed analysts' estimates for quarterly profit on Wednesday, hit by lower orders in its business that supplies turbines and compressors to liquefied natural gas (LNG) producers.
Orders in the unit fell 10% year-over-year, with equipment orders dropping 16% and service orders decreasing 4%, amid concerns that demand for LNG will decline this year. The unit, turbomachinery & process solutions, was one of Baker Hughes' strongest in the earlier quarters of 2019, as U.S. LNG developers built a record amount of capacity to tap into a push by Asian countries for a cleaner alternative to coal-fired power plants.
Last quarter, CFO Brian Worrell had forecast stronger revenues and margins in that unit versus the prior year's quarter. U.S. exports of LNG hit record levels in October and November of last year, averaging 5.8 billion cubic feet per day (Bcf/d) and 6.3 Bcf/d, respectively, according to the U.S. Energy Information Administration.
Baker Hughes also reported North America revenue in its oilfield services unit fell 15% from a year earlier to $1.04 billion, echoing results from rivals Schlumberger NV and Halliburton Co.
The three companies kicked off this year by putting up some units on the block in a bid to reshape their businesses to cope with sharp declines in U.S. shale activity, Reuters reported last week. The shale slowdown also forced Halliburton to take a $2.2 billion charge in the fourth quarter, following a $12-billion charge taken by Schlumberger last year. Both companies have also warned that spending by U.S. land customers would fall around 10% this year from 2019. "As we look ahead to 2020, we see a macro environment that is slowly improving,
Lorenzo Simonelli, Baker Hughes' chief executive, said in a release. Shares were down 1.5% to $22.40 in thin pre-market trading. Total revenue from the company's oilfield services business, which accounts for roughly half of total sales, rose 7.5% to $3.29 billion.
Adjusted net income attributable to the company was 27 cents per share in the three months ended Dec.31. Analysts on average had expected a profit of 31 cents per share, according to IBES data from Refinitiv.
Baker Hughes also booked $216 million of restructuring charges related to its separation from General Electric Co, up from $116 million a year earlier. Total revenue rose about 1% to $6.35 billion, but missed estimate of $6.47 billion.
(Reporting by Shanti S Nair and Shariq Khan in Bengaluru and Liz Hampton in Denver Editing by Sriraj Kalluvila and Chizu Nomiyama)
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