By Chelsey Dulaney
Baker Hughes Inc.on Tuesday said it ramped up head count
reductions to 17% of its total workforce during the first quarter,
while the oil-field services company also closed or consolidated
140 facilities during the first quarter amid falling oil
prices.
The company also reported first-quarter results that came in
sharply below Wall Street expectations.
Shares were down 0.8% in early trading Tuesday.
Baker Hughes, which had previously estimated job cuts at 7,000,
said it has now slashed 10,500 positions.
The moves, expected to reduce costs by $700 million a year, come
as tumbling oil prices are prompting many of its customers to
curtail or cancel projects. Chief Executive Martin Craighead said
he expects the tough market conditions to continue.
For the quarter ended March 31, Baker Hughes reported a loss of
$589 million, or $1.35 a share, compared with a prior-year profit
of $328 million, or 74 cents a share. Excluding restructuring and
severance charges, among other items, the company's adjusted
per-share loss was seven cents.
Revenue fell 20% to $4.6 billion.
Analysts polled by Thomson Reuters were expecting adjusted
earnings of 46 cents a share on revenue of $5.35 billion.
"Our first quarter results are a reflection of the extreme
market forces faced by our industry since late December," Mr.
Craighead said.
Earlier this month, Baker Hughes said it suspended the quarterly
publication of the U.S. onshore well count as it seeks to cut costs
and continue publishing its closely watched weekly rig count
reports.
Meanwhile, Baker Hughes is moving forward with its deal to be
bought by larger rival Halliburton Co. The deal, struck in November
and valued at almost $35 billion at the time, underscored the new
realities for energy companies in a world suddenly awash with oil.
As a result, oil-field services companies, which are hired to drill
and pump wells, are facing less demand for their services and
pressure to cut prices.
Industry experts have predicted that firms like Baker Hughes and
Halliburton will have to shrink further as clients demand price
cuts.
Halliburton said Monday that it has cut 9,000 jobs, or 10% of
its workforce, in the past two quarters and plans to lay off more
employees in the coming months.
Meanwhile, Schlumberger Ltd., the largest oil-field service
company in the world, last week said it would lay off an additional
11,000 employees, bringing its total job cuts to 20,000, or 15% of
its workforce.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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