By Scott Kanowsky
Investing.com -- Shares in Baker Hughes (NASDAQ:BKR) tumbled by more than 10% on Wednesday after the oilfield services provider reported a bigger second quarter loss, hit by a one-off charge from the suspension of its Russian operations and supply chain inflation.
The company swung to a net loss of $839M in the three months ended on June 30, wider than a loss of $68M during the same period last year. Revenue also fell by 2% versus the previous year, coming at $5B for the quarter, and well below analyst estimates.
Adjusted diluted earnings per share edged slightly higher on an annual basis to $0.11, missing expectations of $0.22.
Weighing on these results was a $365M charge related to the halting of "substantially all" of Baker Hughes operations in Russia in the wake of the Kremlin's invasion of Ukraine. The company said these units are either prohibited under Western sanctions or "unsustainable" given the current geopolitical tensions in the region.
Baker Hughes added that the group also faced headwinds from higher supply chain costs and shortages of key components.
Chairman and chief executive officer Lorenzo Simonelli warned that oil markets will encounter an "unusual set of challenges" during the second half of 2022 and 2023.
"[T]he demand outlook for the next 12 to 18 months is deteriorating, as inflation erodes consumer purchasing power and central banks aggressively raise interest rates to combat inflation," Simonelli said.
He added that oil prices will remain volatile but will stay at elevated levels due to supply chain constraints stemming from underinvestment globally and the potential need to replace Russian barrels. These higher prices will likely offset "demand destruction," Simonelli said.
Shares in Baker Hughes have fallen by more than 43% over the past year.