Baker Hughes exceeds profit expectations on the strength of industrial and energy technology demand

Baker Hughes, a provider of oilfield services, beat Wall Street expectations for its third-quarter profits on Thursday. This was due to the strength in their industrial and energy technologies (IET) division.

Oilfield services firms are navigating a volatile oilfield market. Resilient areas such as LNG infrastructure, upgrades to the power grid, and increasing electricity demand by data centers help support growth.

Baker is also relying on the Industrial and Energy Technology (IET), division of the company to increase its presence in the LNG and natural gas market. This strategy should support revenue growth and position in the energy transformation.

The company reported that IET backlog increased 3% sequentially, to a new record of $32.1 billion. Quarterly orders grew 44% on an annual basis, to $4.14 Billion, indicating a growing demand for LNG projects and energy transformation.

Baker Hughes is expecting IET revenues between $3.2 and $3.7 billion this quarter and $12.8 to $13.3 billion over the course of the year. Orders are expected to range from $13.5 to $14.5 billion.

Lorenzo Simonelli, CEO of Baker Hughes, said: "While oilfield equipment & services segment margins weakened, reflecting a broader macro-environment, IET delivered a strong performance in the second quarter, driving adjusted EBITDA margins up year-over-year."

Oilfield service providers face a subdued market for drilling and completion services as producers use more efficient extraction techniques and the supply of oil is increasing.

Operators are also cautious due to volatile oil prices, OPEC+ surplus capacity and trade uncertainty, especially in North America.

According to LSEG, the Houston-based firm reported earnings adjusted of 68 cents for the three-month period ended September 30. This was higher than analysts' average estimates of 62 cents.

The revenue for the quarter of $7.01 Billion also exceeded expectations of $6.83 Billion.

Halliburton and SLB also exceeded third-quarter profit expectations. (Reporting by Arunima Kumar in Bengaluru; Editing by Maju Samuel)

(source: Reuters)