Baker Hughes lost $188 million in second quarter

HOUSTON — Baker Hughes lost $188 million in net income in the second quarter as oil-producing customers demanded lower prices for tools and services and as foreign currency exchange fluctuations hit it in international markets.

The Houston oil field service firm said Tuesday its $188 million net loss, a loss of 43 cents a share, in the second quarter, compared to its $353 million profit, or 80 cents a share, in the same April-June period last year. Revenue fell from $5.94 billion to $3.97 billion.

The company, which is set to sell itself to larger rival Halliburton by the end of the year, saw its biggest revenue decline in North America, with sales falling 26 percent below first-quarter revenue. Revenue declined 11 percent in Latin America, 3 percent in Europe and Africa, and 7 percent in the Middle East.

“Even though the severity of the revenue decline has compressed our margins, we have minimized the impact by aggressively reducing costs and rightsizing our operational footprint,” Baker Hughes CEO Martin Craighead said in a written statement.

He said the cuts made it possible for the company to have decremental margins — profit lost per dollar of revenue lost — of 35 percent compared to the previous year, which he said was a significant improvement from the 2009 downturn in oil prices.

He said the company expects the unfavorable market to persist in the second half of the year, and doesn’t believe North American drilling activity will increase as long as oil prices are low. The North American rig count, he said, are anticipated to remain relatively unchanged for the rest of the year.

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