Baker Hughes profit misses estimates amid supply chain woes

Oilfield firm Baker Hughes Co (BKR.N) reported quarterly profit that fell short of analyst expectations on Wednesday, in part due to global supply chain issues, sending its shares down sharply in early trading.

Oil service firms are expected to be supported by a rebound in oil prices to pre-pandemic levels as demand recovers and the Organization of the Petroleum Exporting Countries, Russia and their allies stick to their output-increase schedule instead of accelerating production.

But some companies are seeing earnings clipped by higher prices for materials and disruptions to global supply chains. Baker Hughes and rival Halliburton have also been negatively impacted by Hurricane Ida, which disrupted operations on the U.S. Gulf Coast and Gulf of Mexico in August and September.

Baker Hughes reported adjusted net income of $141 million, or 16 cents per share, in the third quarter, missing forecasts for 21 cents per share, according to Refinitiv IBES data. Revenues of $5.093 billion also fell short of expectations of $5.321 billion.

Shares slipped 4% to $25.79 in early trading. They are up about 29% year-to-date, lagging gains in global oil prices, which have risen about 62%.

“As we look ahead to the rest of 2021 and into 2022, we see continued signs of global economic recovery that should drive further demand growth for oil and natural gas,” Baker Hughes Chief Executive Officer Lorenzo Simonelli said.

On a call with investors, Simonelli acknowledged Baker Hughes experienced “some mixed results across our product companies.”

Its oilfield services unit was negatively impacted by Hurricane Ida and supply chain problems, which costs the company roughly $30 million to $40 million during the quarter.

Higher costs for chemicals, which have not yet been fully passed onto customers, also weighed on earnings.

Wall Street analysts were underwhelmed by the report, calling it neutral to negative.

“At the segment level, there were a number of different moving pieces which may drive some uneasiness today,” Tudor, Pickering, Holt & Co said in a note, pointing to disappointing results in oilfield services and digital solutions. Those units offset a margin beat in its Turbomachinery and Process Solutions unit.

Its digital solutions unit was also negatively impacted by supply chain problems related to semiconductors, boards and displays, executives said on the call.

Net income attributable to the company was $8 million, marking Baker Hughes’ first quarterly profit since the fourth quarter of 2020.

Crude prices climbed 4.5% in the quarter ended Sept. 30. and are currently trading just above $84 a barrel .