What Is Baker Hughes’s Growth Strategy for 2Q16?



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.

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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.


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