Baker Hughes 2015 Annual Report Download - page 37

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Revenue and Profit Before Tax
Revenue and profit (loss) before tax for each of our five operating segments is provided below. The
performance of our operating segments is evaluated based on profit or loss before tax, which is defined as income
or loss before income taxes and before the following: net interest expense, corporate expenses, and certain gains
and losses, including impairment and restructuring charges, not allocated to the operating segments.
2015 Compared to 2014
Year Ended December 31,
2015 2014 $ Change % Change
Revenue:
North America $ 6,009 $ 12,078 $ (6,069) (50)%
Latin America 1,799 2,236 (437) (20)%
Europe/Africa/Russia Caspian 3,278 4,417 (1,139) (26)%
Middle East/Asia Pacific 3,441 4,456 (1,015) (23)%
Industrial Services 1,215 1,364 (149) (11)%
Total $ 15,742 $ 24,551 $ (8,809) (36)%
Year Ended December 31,
2015 2014 $ Change % Change
Profit (Loss) Before Tax:
North America $(687) $ 1,466 $ (2,153) (147)%
Latin America 134 290 (156) (54)%
Europe/Africa/Russia Caspian 157 621 (464) (75)%
Middle East/Asia Pacific 204 675 (471) (70)%
Industrial Services 97 119 (22) (18)%
Total Operations (95) 3,171 (3,266) (103)%
Corporate and other (2,518) (544) (1,974) 363 %
Total $(2,613) $ 2,627 $ (5,240) (199)%
North America
North America revenue for 2015 was $6.01 billion, a decrease of $6.07 billion, or 50%, compared to 2014. The
steep reduction in commodity prices experienced by the industry in 2015 severely impacted onshore North America
exploration and production companies as a result of the higher lifting cost per barrel of many of these producers.
These operators have addressed these cash constraints by reducing drilling activity in less economical
unconventional plays, delaying well completion activities, and driving price discounts from their service providers as
they await higher commodity prices. These lower activity levels, as evident in the 47% rig count drop, and
deteriorating pricing conditions were the main drivers for the revenue decline in this segment. All product lines have
been unfavorably impacted by the drop in activity, with production chemicals, deepwater operations and artificial lift
showing the most resilience. Additionally, the reduced activity and well completion delays created an oversupply of
hydraulic fracturing equipment, which caused the price deterioration in the onshore pressure pumping product line
to be more severe. As such, we lost market share in this product line in 2015 as we worked to maintain cash flow
positive operations despite an oversupplied market.
North America loss before tax was $687 million in 2015, a decrease of $2.15 billion, or 147%, compared to profit
before tax of $1.47 billion in 2014. The reduction in profitability was primarily due to the sharp decline in activity and
an increasingly unfavorable pricing environment. Additionally, as a result of the industry downturn and its impact on
our business, we incurred costs of $181 million in 2015 to write-down the carrying value of certain inventory. The
impact from these unfavorable market conditions was partially mitigated by actions taken in the year to reduce our