Baker Hughes chief says days of decline are over
Revenue for Q2 hits $2.34 billion in spite of downturn
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Baker Hughes Incorporated today announced that net income for the second quarter 2009 was $87 million, compared to $379 million for the second quarter 2008 and $195 million for the first quarter 2009.
Revenue for the second quarter 2009 was US$2.34 billion, down 22% compared to $3.00 billion for the second quarter 2008 and down 12% compared to $2.67 billion for the first quarter 2009.
"Our second quarter results reflect trends in the North America and international markets. For North America, the decline in activity has been severe; however, in recent weeks the market has been stabilising,” said Chad Deaton, Baker Hughes chairman, president and chief executive officer.
Net income for the second quarter 2009 includes expenses of $54 million before tax comprised of $16 million associated with employee severance and reorganisation costs and $38 million associated with increasing the company’s allowance for doubtful accounts. This is on top of an employee severance bill of $54 million in Q1 2009.
“We believe the decline in the US rig count is now behind us and we expect a gradual increase in drilling activity beginning in 2010. Pricing deterioration has slowed and with our cost cutting efforts we expect the second quarter 2009 to have marked the bottom for North America profitability,” said Deaton.
"Internationally, the decline in activity has been less severe and isolated to specific geographic areas. The recent strengthening of oil prices provides support for customer activity in the second half of 2009 and sets the stage for incremental growth in spending in 2010. However, price concessions negotiated in the first half of 2009 will drive international profitability lower in the second half of the year.”
The statement noted that activity in the Middle East - Asia Pacific and Latin America regions will increase modestly. “We were awarded new work or renewed international contracts in the second quarter for more than $1.5 billion for these regions,” added Deaton
Baker Hughes reiterated that it is continuing to invest throughout the region with major facilities scheduled to open in the second half of 2009 and 2010 in Saudi Arabia and Qatar, as well as India and China. Baker Hughes was awarded $400 million in the second quarter 2009, including significant wins for wireline.