Baker Hughes Incorporated (NYSE:BHI) has reported a surge in first-quarter earnings as a favourable macroeconomic backdrop resulted in strong demand for its oilfield services and energy technology.
The company attributed the performance partly to its Industrial & Energy Technology (IET) and Subsea & Surface Pressure Systems (SSPS) business segments. It also highlighted that its Oilfield Services & Equipment unit was awarded its largest subsea tree order in almost five years through a contract with Azule Energy in the Agogo oilfield offshore Angola.
Orders for the three months to March 31, 2023, jumped 12% from a year earlier to $7.6 billion.
Revenue rose 18% year-over-year to $5.7 billion, with adjusted operating income coming in 47% higher at $512 million. Net income surged 700% to $576 million, while adjusted diluted earnings per share increased by 87% to $0.28, up from $0.15 in 1Q 2022 and ahead of the $0.26 expected by the Street.
“We maintained our strong order momentum in IET and SSPS. We also delivered solid operating results at the high end of our guidance in both business segments, booked almost $300 million of New Energy orders and generated approximately $200 million of free cash flow,” chairman and CEO Lorenzo Simonelli said in a statement.
Unique environment
Simonelli noted that the current environment remains unique, with a spending cycle that is more durable and less sensitive to commodity price swings, relative to prior cycles. Additionally, he noted the continued shift towards the development of natural gas and liquefied natural gas (LNG).
“As the world increasingly recognizes the crucial role natural gas will play in the energy transition, serving as both a transition and destination fuel, the case for a multi-decade growth opportunity in gas is steadily improving as both a transition and destination fuel,” he added.
“While 2023 has already started off with some macro volatility, we remain optimistic on the outlook for energy services and Baker Hughes. Our diverse portfolio features long cycle and short cycle businesses that position us well to navigate any periods of variability that may occur across the energy sector.”
The company’s shares traded 2.8% higher at $29.69 in pre-market trade.
Contact the author at stephen.gunnion@proactiveinvestors.com