01—Abstract
Summary
Summary of the 10-K filed February 14, 2023. Cited figures are marked; the original filing is the authoritative source.
Baker Hughes Company reported a mixed operational performance in 2022, characterized by robust commercial activity and margin improvements in the Oilfield Services & Equipment (OFSE) segment, alongside record orders in Industrial & Energy Technology (IET), particularly in LNG and new energy solutions.
However, the company faced operational challenges including cost inflation, supply chain delays, and the impact of suspending operations in Russia. Despite these headwinds, revenue increased to $21.2 billiona, driven by higher OFSE volumes, though operating income saw a decrease due to higher restructuring and impairment charges. The company is actively executing a strategy focused on transforming its core business, investing for growth in high-potential segments like industrial power and chemicals, and positioning for new energy frontiers such as hydrogen and carbon capture.
Strategic acquisitions and investments were made to bolster its technology portfolio and expand into new energy areas. Looking ahead, Baker Hughes anticipates continued growth in the energy sector, driven by global underinvestment, geopolitical factors, and the ongoing energy transition, positioning the company to benefit from a multi-year upturn in global activity.
02—Key points
Key Highlights
- Revenue increased by 3% to $21.2 billion in 2022, primarily driven by higher volume in the Oilfield Services & Equipment (OFSE) segment.
- Total segment operating income increased by 16% to $2.3 billion, with OFSE showing a significant improvement of $371 million.
- The company returned $1.6 billion to shareholders in 2022 through dividends and share repurchases, signaling a commitment to capital allocation.
- Baker Hughes made strategic acquisitions and investments in new energy technologies, including BRUSH Group, Quest Integrity, AccessESP, Mosaic Materials, and NET Power, to enhance its portfolio and position for future growth.
- The company announced a significant organizational restructuring to create two operating segments (OFSE and IET) to simplify operations and enhance profitability, with ongoing transformation efforts expected to yield benefits.
- Despite operational challenges like cost inflation and supply chain delays, the company saw increased activity and achieved price improvements, particularly in the second half of 2022.
- Baker Hughes maintained a positive outlook for the energy sector, anticipating a multi-year upturn in global activity driven by underinvestment, geopolitical events, and the energy transition.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 14, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $21.16B$20.50B | +3.2% |
| R&D Expenses | $552.00M$492.00M | +12.2% |
| SG&A Expenses | $2.51B$2.47B | +1.6% |
| Operating Expenses | $19.97B$19.19B | +4.1% |
| Operating Income | $1.19B$1.31B | −9.5% |
| Net Income | -$601.00M-$219.00M | −174.4% |
| EPS (Basic) | $-0.61$-0.27 | −125.9% |
| EPS (Diluted) | $-0.61$-0.27 | −125.9% |
05—Questions
Frequently Asked Questions
What was Baker Hughes's financial performance in 2022?
In 2022, Baker Hughes generated $21.2 billion in revenue, a 3% increase from 2021, primarily driven by higher volumes in its Oilfield Services & Equipment (OFSE) segment. However, operating income decreased to $1.2 billion from $1.3 billion in the prior year, largely due to higher restructuring, impairment, and other charges. The company reported a net loss of $0.6 billion for the year.
How is Baker Hughes positioning itself for the energy transition?
Baker Hughes is actively pursuing a strategy focused on three pillars: transforming its core business, investing for growth in areas like industrial power and new energy technologies, and positioning for new energy frontiers such as hydrogen, geothermal, and carbon capture, utilization, and storage (CCUS). The company made several strategic acquisitions and investments in 2022 to support these initiatives and is expanding its low-to-zero carbon solutions.
What were the key operational challenges faced by Baker Hughes in 2022?
The company experienced several operational challenges in 2022, including significant cost inflation, supply chain delays affecting product deliveries, adverse foreign exchange impacts, and the suspension of operations in Russia due to geopolitical events. These factors impacted overall profitability, though performance improved in the latter half of the year due to moderating supply chain issues and price increases.
How does Baker Hughes allocate capital?
Baker Hughes maintains a flexible capital allocation policy. In 2022, the company returned $1.6 billion to shareholders through dividends and share repurchases. It also continued to invest in its portfolio through strategic acquisitions and early-stage new energy investments, demonstrating a balance between returning capital to shareholders and investing for future growth.
What is the outlook for Baker Hughes in the coming year?
Baker Hughes holds a positive outlook for 2023, anticipating continued growth in the energy sector due to years of underinvestment, amplified by recent geopolitical factors. The company expects a second consecutive year of strong growth in global upstream spending and sees significant opportunities in both traditional oil and gas markets and new energy solutions, supported by favorable legislative actions like the Inflation Reduction Act.
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