Baker Hughes Posts Q2 Loss, Sees Continued Uncertainty

Energy technology and services provider Baker Hughes reported July 22 a net loss of $355mn in Q2 2020, up from an $11mn loss in the year-ago period. Operating income reversed to a $52mn loss from a $271mn profit.

Cash flow from operating activities fell to $230mn from $478mn, while free cash flow, after accounting for capital expenditures of $167mn in Q2, remained in the black, at $63mn versus $152mn in Q2 2019.

“The second quarter of 2020 was challenging in several areas as our company navigated through the ongoing impacts of the Covid-19 pandemic and the sharp decline in activity levels due to lower oil and gas prices,” CEO Lorenzo Simonelli said. “Despite these headwinds, I was pleased with how our team executed with strong margin performance, cost execution, solid order bookings and another quarter of free cash flow generation.”

The turbomachinery & process solutions segment, Simonelli said, yielded a strong operating income margin of 12.8% in the quarter to lead all segments on that metric, while order bookings were off by just 6% from Q1 2020, at $1.3bn, although down 34% year-over-year.

Covid-19 related lockdowns have been easing globally in recent weeks, and economic activity likely troughed during the second quarter, Simonelli said. Still, visibility on the economic outlook remains “extremely” limited.

“More specifically, the risk of a second wave of virus cases, the reinstitution of select lockdowns, and the risk of lingering high unemployment creates an uncertain economic environment that likely persists through the rest of 2020,” he said. “Given these factors, we are preparing for potential future volatility, while also focusing on structurally reducing our cost base and implementing a number of strategic initiatives across all of our product companies.”