Baker Hughes Drilling Deep Into The Red

Energy services firm Baker Hughes plunged into the red during the first quarter as the oil price rout and Covid-19 pandemic took their toll.

The firm, which operates a subsea centre of excellence in Montrose employing more than 500 staff, posted pre-tax losses of £12.9 billion for the quarter, down from a profit of £111.5 million a year ago, while revenues dipped 3% year-onyear to £4.4bn.

Orders for the quarter totalled £4.5bn, down 3% yearover-year.

The company said the virus put an £80m dent in its operating income during the three months by disrupting supply chains and causing a drop-off in sales in Asia-Pacific and Europe.

Chief executive Lorenzo Simonelli insisted the company had delivered “solid results” in some of its business segments in the face of a “volatile macro environment” driven by a marked drop in oil prices and the pandemic.

He said: “I am extremely proud of our team for their focus and perseverance through an extraordinary set of circumstances.”

The firm had taken “decisive action” to cut costs, accelerate structural changes and deploy technology that can lower costs for clients, he added.

It has lowered 2020 capital expenditure by a fifth compared to 2019 and put in place a restructuring plan to “right-size its operations”.

Restructuring, impairment and other charges totalling £1.2bn were recorded in Q1, mainly related to “product line rationalisation” and “headcount reductions”.

Mr Simonelli said the firm was “uniquely positioned to navigate the challenging market environment”.

He said: “Our strong backlog of longer-cycle projects and aftermarket services provides greater stability as our shortercycle businesses encounter pressure from the dramatic declines in activity.

“We remain committed to delivering critical technology that helps our customers operate more efficiently, lowering their costs and improving their outcomes.

In January, the firm announced a seven-year extension to its contract with Montrose Port Authority, after opening a £31m facility at the port in 2019, which included the construction of a 4,000sq m building and the expansion of a warehouse.

As of November, Baker Hughes employed around 2,000 staff across Aberdeen and Aberdeenshire.

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