In North America, operating profit before tax has been lowered from 11.7% in the third quarter to an expected 8.5% to 9.5% in the fourth quarter.
In its international business, the company sees lower rig counts in Brazil and Colombia, delays in North Sea activity and more operational delays in Iraq. However the company now says that operating profit should be “similar to” the 12% reported in the third quarter, excluding bad debt recognized in Latin America and Europe.
Pressure pumping services have declined in North America as natural gas producers cut back on production in the face of weak prices. In order to keep the business going, Baker Hughes and others have competed fiercely on prices. When the company reported third-quarter results in October, it noted that its collective rig count in Brazil, Colombia and Norway was down 17%, but that it expected the count to recover in the fourth quarter. New delays have sunk that hope.
Just last week Schlumberger Ltd. (NYSE: SLB) issued its own earnings warning, saying earnings per share would be $0.05 to $0.07 lower than originally estimated. Its reasons for the decline matched those of Baker Hughes.
Shares of Baker Hughes are down 3.5% in premarket trading, at $39.21 in a 52-week range of $37.08 to $52.96.
Paul Ausick
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