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Baker Hughes Surges After Strong Q3 Earnings and Order Book Growth

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Baker Hughes Surges After Strong Q3 Earnings and Order Book Growth

[picture of Baker Hughes office building in Houston, Texas, USA]

Baker Hughes (NASDAQ:BKR) experienced a 3.3% increase in Thursday’s trading following the announcement of better than expected Q3 adjusted earnings. Despite ongoing global economic uncertainty, the company remains optimistic about the positive momentum across its portfolio.

In Q3, Baker Hughes reported a significant swing in net income, moving from a loss of $17 million (or a loss of $0.02/share) in the year-ago quarter to a profit of $518 million (or $0.51/share). The company’s revenues demonstrated year-on-year growth of 24% and quarter-on-quarter growth of 5%, totaling $6.64 billion. This increase can be attributed to higher volume in the Oilfield Services & Equipment and Industrial & Energy Technology units.

Internationally, Baker Hughes saw a 19% year-on-year increase (and a 2% quarter-on-quarter increase) in oilfield services segment revenues, amounting to $2.89 billion. In North America, revenues also grew by 8% year-on-year and 2% quarter-on-quarter, reaching $1.06 billion.

Total orders in Q3 surged by a remarkable 40% year-on-year, totaling $8.51 billion. Within this figure, there was a 13% year-on-year increase (with no change quarter-on-quarter) in Oilfield Services & Equipment orders, reaching $4.18 billion. Additionally, Industrial & Energy Technology orders experienced an impressive 84% year-on-year increase and a 32% quarter-on-quarter surge, amounting to $4.33 billion.

Although Q3 free cash flow rose by 42% year-on-year, it slightly decreased by 5% quarter-on-quarter, settling at $592 million.

CEO Lorenzo Simonelli expressed confidence in the company’s unique portfolio, stating, “While there is a growing consensus that the energy transition will likely take longer and be more complex than many expected, our unique portfolio is set to benefit irrespective of the pace of development.”

Analysts share this positive sentiment, with Citi’s Scott Gruber, who rates the stock as a Buy, noting, “Results should drive a modestly positive reaction in BKR shares given solid EBITDA and strong bookings.”

In conclusion, Baker Hughes’ impressive Q3 earnings and robust order book growth have sparked investor enthusiasm. The company’s diversified portfolio and optimistic outlook position it well, regardless of the challenges in the energy transition.