US oil service company Baker Hughes took a hit on financials following the suspension of activities in Russia, which cost the company USD 365m.
The situation is further complicated by oil demand facing a downward trend over the next year to 1.5 years. At the same time, growth is expected to slow as a result of interest hikes carried out by central banks like the US Federal Reserve, says CEO and Chair of Baker Hughes Lorenzo Simonelli, according to Bloomberg News.
The subpar results and outlook send the share price down by 4.6% in pre-market trading.
Baker Hughes, which is the world’s second largest oil service company, generated Q2 revenue of USD 5.05bn, which was lower than analysts’ estimates of USD 5.35bn compiled by Bloomberg News.
Adjusted diluted earnings per share came to USD 0.11. On this item, analysts had expected double as much, USD 0.22 per share.
On the other hand, the order book swelled more than expected. Order intake amounted to USD 5.86bn against expectations of USD 5.36bm while also representing 15% growth compared to Q2 2021.
Adjusted earnings before interest, taxes, depreciations, and amortizations ended at USD 376m against expectations of USD 408.5m, while the free cash flow came to USD 147m against estimates of USD 349.1m.
The company has reported to halt all new investments in Russia as a result of the invasion of Ukraine.
Baker Hughes’ activities in Russia are currently subject to sanctions or assessed to be unsustainable in the current economic climate. Moreover, these Russian activities have been put up ”for sale”.
Even though demand looks to be in for a decline in the future, there are nevertheless supportive circumstances for the company’s stock.
”Due to years of underinvestment globally and the potential need to replace Russian barrels, broader supply constraints can realistically keep commodity prices at elevated levels even in a scenario of moderate demand destruction,” says Simonelli in a statement in the Q2 financial report.
The final assessment from the CEO is that oil prices will remain volatile going forward, but that they are buoyed by strong demand.
Yet another oil service giant leaves Russia
More from EnergyWatch
Ørsted makes group changes again
The Danish power company shakes up its organization once again, now parting ways with offshore wind chief of many years, while also moving other profiles up the corporate ladder.
Siemens Gamesa expands 5.X platform
The manufacturer’s largest onshore platform is now being tuned up to offer a 7MW unit. Natural evolution of species, says CEO.
EU Commission permits German aid to coal plants reopening
The nation has received permission to earmark a huge sum to reopen five essentially decommissioned coal-fired power plants.
Ørsted declines Taiwan tender bid
Quite atypically, the Danish market leader publicly rejects to bid in Taiwan’s solicitation for 3GW offshore wind due to poor framework conditions. The green transformation will wilt if developers build uneconomic projects, says CEO.
Last platform now in position at Tyra site
After completing the voyage from Batam, Indonesia, the process module is now in position in the North Sea. Only one piece is now missing from the reconstruction project at the Tyra site.
Economist for building the energy infrastructure of the future 
Do you want to make Denmark's largest energy and telecommunications group even greener? 
AgriFoodTure: Entrepreneurial and Innovative Mission Director 
IT Specialist 
Social Media Manager 
Optimization and change agent 
EPC Project Manager 
Director of VEKS 
Business Developer 
Hydrogen Deal Structurer 
Project manager for future energy production 
Construction Manager for offshore wind turbine projects