Baker Hughes’s revenue growth
Baker Hughes’s (BHI) revenues were on a downtrend from 1Q15 to 1Q16, as all of the company’s segments saw lower revenues.
Its North America operations suffered the highest revenue fall of 59%, while the Industrial Services segment was the most resilient, with a fall of ~14%. In comparison, CARBO Ceramics (CRR) saw a 55% revenue drop in 1Q16 over 1Q15.
Baker Hughes’s value drivers
- A 26% lower US rig count in 1Q16 compared to 4Q15 was led by a steep drop in its US onshore activity.
- Lower prices for BHI’s products and services negatively affected its North America results.
- A higher share of lower priced products in offshore and artificial lift markets negatively affected BHI’s Latin America business.
- Reduced activity, pricing pressure, and an unfavorable product and geographic mix negatively affected BHI’s Europe, Africa, and Russia’s Caspian regions.
- Ongoing project delays in the process and pipeline services business, which were due to reduced customer spending, affected the Industrial Services segment negatively.
However, cost-saving measures and improvement in working capital in many of BHI’s international operations partially mitigated these negative factors. Baker Hughes comprises 0.06% of the WisdomTree Total Dividend ETF (DTD).
For more information on the company, please refer to A Comprehensive Analysis of Baker Hughes.
Baker Hughes’s growth strategies
Following the merger breakup with Halliburton (HAL), BHI revealed its strategy on May 2. The tenets of its future plans are:
- rationalization of full service models
- building a broader range of global sales channels for select countries
- downsizing its presence in the US onshore pressure pumping business
Next, we’ll discuss BHI’s management outlook from the past few quarters.