Baker Hughes profit falls 9% from Q1 as oilfield services demand remains tepid

© Reuters. FILE PHOTO: The logo of Baker Hughes (BKR) is seen in this image provided July 21, 2020. Baker Hughes/Handout via REUTERS

(Reuters) -Oilfield services provider Baker Hughes Co said on Wednesday its adjusted profit fell 9% in the second quarter from the previous three months and it missed Wall Street estimates for earnings, as crude producers kept a tight lid on spending.

While oil demand has rebounded from the pandemic lows seen last year, output has only inched higher as large public companies vow to hold production flat. That has boosted oil prices, with crude futures trading earlier this month at levels last seen in 2018.

The recovery in oil demand could face a threat from new strains of COVID-19, but spending and activity should gain momentum through the year as the macro environment improves, Chief Executive Officer Lorenzo Simonelli said in a statement.

Baker Hughes has been pivoting towards an energy transition, re-branding itself as an energy technology company and shedding some traditional oilfield businesses. Revenue at its oilfield services unit was down about 2% year-over-year, while oilfield equipment revenue dipped 8% over that period.

Shares were up 4.79% in pre-market trading at $21. Brent crude futures were up about 1.6% on Wednesday to $70.44 per barrel. [O/R]

Adjusted net income attributable to the company was $83 million, or 10 cents per share, in the quarter ended June 30, compared with $91 million, or 12 cents per share, in the first quarter. Wall Street analysts had anticipated earnings of 16 cents per share, according to Refinitiv IBES.

Revenue of $5.142 billion for the quarter topped forecasts of $4.948 billion, according to Refinitiv.

The company took a $125 million charge related to restructuring, impairment and other items.

Overall, Wall Street analysts said the results were neutral to positive, pointing to stronger profit margins and free cash flow.

Analysts for investment firm Tudor Pickering Holt & Co called the report "solid" and lauded Baker's continued focus on technological innovation and the energy transition.