Baker Hughes Stock Gets Crushed on Supply Delays and a Russia Charge | BHGE Message Board Posts


Baker Hughes, a GE company

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Msg  96 of 96  at  7/20/2022 5:02:01 PM  by

jerrykrause


Baker Hughes Stock Gets Crushed on Supply Delays and a Russia Charge

Baker Hughes Stock Gets Crushed on Supply Delays and a Russia Charge
 

Oil-services company Baker Hughes reported a disappointing quarter after being hit with a charge related to the suspension of its Russian operations and after it saw component shortages because of supply-chain delays.

The stock was the worst performer in the S&P 500 on Wednesday, down 9.7% to $25.48 after falling more than 13% earlier. The stock was on pace for one of the largest percentage decreases since the early days of the pandemic, when it fell almost 14%.

Baker Hughes (ticker: BKR) said adjusted earnings for the second quarter ended in June were 11 cents a share, almost half of analysts' expectations of 21 cents, according to FactSet. Adjusted operating income was $376 million, which included the $365 million charge related to the suspension of substantially all of the company's operations in Russia.

Sales of $5.05 billion in the second quarter also were below estimates of $5.34 billion.

Besides Russia, problems were seen at the company's Digital Solutions segment, which helps in applications such as the Industrial Internet of Things. The segment continues to be affected by availability shortages in both chip and electronic components, Chief Financial Officer Brian Worrell said on the earnings call. That is hurting the convertibility of its backlog.

Baker Hughes missed expectations in the first quarter as well.

The company said its oil demand outlook for the next 12 months to 18 months is "deteriorating" as inflation erodes consumers' purchasing power and central banks aggressively raise interest rates. There's also no clear take on the direction of oil prices—the potential need to replace Russian barrels will keep commodity prices at elevated levels, but demand might offset that.

However, the company could be protected from gas cuts in the European Union.

"We don't see a major risk to operations imminently, but we're continuing to monitor the situation carefully," Baker Hughes said during the earnings call. "We are considered a critical industry, as the designation we had during the pandemic period. We'll be protected in the event of any gas shortages."

Rival oil services company Halliburton (HAL) reported solid second-quarter earnings on Tuesday . Earnings per share of 49 cents from $5.1 billion in sales beat estimates of 45 cents and $4.7 billion in sales. Halliburton stock gained 2% on Tuesday. It was down 0.9% on Wednesday.

 


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