Baker Hughes profit misses estimates as LNG equipment demand wanes

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(Reuters) – Oilfield services provider Baker Hughes Co (N:) missed analysts’ estimates for quarterly profit on Wednesday, hit by lower orders in its business that supplies turbines and compressors to liquefied (LNG) producers.

Orders in the unit fell 10% year-over-year, with equipment orders dropping 16% and service orders decreasing 4%, amid concerns that demand for LNG will decline this year.

The unit, turbomachinery & process solutions, was one of Baker Hughes’ strongest in the earlier quarters of 2019, as U.S. LNG developers built a record amount of capacity to tap into a push by Asian countries for a cleaner alternative to coal-fired power plants.

Baker Hughes also reported North America revenue in its oilfield services unit fell 15% from a year earlier to $1.04 billion, echoing results from rivals Schlumberger NV (N:) and Halliburton Co (N:).

The three companies kicked off this year by putting up some units on the block in a bid to reshape their businesses to cope with sharp declines in U.S. shale activity, Reuters reported last week.

The shale slowdown also forced Halliburton to take a $2.2 billion charge in the fourth quarter, following a $12-billion charge taken by Schlumberger last year.

Both companies have also warned that spending by U.S. land customers would fall around 10% this year from 2019.

Total revenue from the company’s oilfield services business, which accounts for roughly half of total sales, rose 7.5% to $3.29 billion.

Adjusted net income attributable to the company was 27 cents per share in the three months ended Dec.31.

Analysts on average had expected a profit of 31 cents per share, according to IBES data from Refinitiv.

Baker Hughes also booked $216 million of restructuring charges related to its separation from General Electric Co (N:), up from $116 million a year earlier.

Total revenue rose about 1% to $6.35 billion, but missed estimate of $6.47 billion.

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