(Baker Hughes Incorporated, 21.Apr.2015) – Baker Hughes Incorporated announced results for the first quarter of 2015.
Latin America revenue was $493 million for the 1Q:15, down $37 million, or 7%, compared to the 1Q:14. The drop in revenue can be attributed to activity declines in the Andean area, as reflected in a 24% decline in the rig count, and revenue declines in Venezuela from both lower rig count activity and unfavorable exchange rates as a result of the currency devaluations that occurred in the 2Q:14.
These reductions in revenue were partially offset by share gains in Mexico’s marine region, increased unconventional activity in Argentina, and share gains in Brazil as a result of a recent drilling services contract.
Adjusted operating profit margin for Latin America in the 1Q:15 was 9.1%, down 180 basis points compared to the 1Q:14. Not unlike revenue, profitability was impacted by reduced onshore activity levels, along with $14 million in reserves for doubtful accounts and inventories, and $5 million for a currency devaluation in Venezuela as the company adopted the prevailing market rate of 192 Venezuelan Bolivars per U.S. Dollar.
In the 2Q:15, the Latin America rig count is projected to drop less than 5%. However, this forecast includes a decrease of 5 deep-water drilling rigs in Brazil relating to demobilization of a local drilling rig supplier facing potential bankruptcy. The reduction of deep-water activity is expected to have a negative impact on the 2Q:15 results.
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