Baker Hughes shares down 15% on Q2 results: oil demand is ‘deteriorating’

Baker Hughes shares down 15% on Q2 results

Shares of Baker Hughes Co (NASDAQ: BKR) are down nearly 15% on Wednesday after the oilfield services company reported weaker-than-expected results for its fiscal second quarter.

Baker Hughes Q2 financial highlights

  • Lost $839 million versus the year-ago figure of $68 million only
  • Per-share loss of 84 cents was up sharply from last year’s 8 cents
  • Adjusted for one-time items, per-share earnings stood at 11 cents
  • Revenue saw a 1.8% year-over-year decline to $5.05 billion
  • Consensus was 21 cents of adjusted EPS on $5.34 billion in revenue

At $147 million, free cash flow came in nearly 62% down versus the same quarter of the previous year and was well below the estimates of $235 million. The stock price is now back where it was at the start of 2022.

Future outlook and CEO’s remarks

Baker Hughes blamed inflationary pressures and the Russia embargo for the weak quarterly performance. In the earnings press release, CEO Lorenzo Simonelli said commodity prices will likely remain “elevated” on the need to substitute Russian energy and years of underinvestment.

On the other hand, however, inflation is hurting consumers’ purchasing power and so, demand for the next eighteen months is not very encouraging. He added:

We believe the outlook for oil prices remains volatile, but still supportive of strong activity levels. Baker Hughes is preparing for all of the scenarios and will continue to execute on its long-term strategy.

The Houston-headquartered firm remains committed to investing in energy transition and returning up to 80% of its FCF to shareholders. Wall Street currently rates Baker Hughes at “overweight” and sees upside to $39 a share on average.

The post Baker Hughes shares down 15% on Q2 results: oil demand is ‘deteriorating’ appeared first on Invezz.

Source: https://invezz.com/news/2022/07/20/baker-hughes-shares-down-15-on-q2-results/