Baker Hughes 2015 Annual Report Download - page 40

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Latin America
Latin America revenue decreased $71 million or 3% in 2014 compared to 2013. Revenue reductions in Brazil
and Venezuela were partially offset by increased revenue throughout the rest of the region. Revenue declined
across most product lines in Brazil due to lower activity levels in 2014, as evidenced by a 27% reduction in the rig
count compared to 2013. Revenue in Venezuela decreased across all product lines as a result of the devaluation of
the Bolivares Fuertes relative to the U.S. Dollar
Latin America profit before tax increased $224 million or 339% in 2014 compared to 2013. The significant
improvement in profitability can be primarily attributed to cost reduction strategies implemented throughout the
region in the second half of 2013, with particular focus on Brazil. 2013 includes a charge of $19 million for
severance related to these actions. Increased activity in Argentina, Mexico and Ecuador also contributed to the
profitability improvement in 2014. Profitability was also impacted by foreign exchange losses of $12 million and $23
million in 2014 and 2013, respectively, due to the currency devaluation in Venezuela.
Europe/Africa/Russia Caspian
EARC revenue increased $376 million or 9% in 2014 compared to 2013. In 2014, we delivered strong revenue
growth in Africa, Continental Europe and Russia Caspian. Revenue was negatively impacted by the unfavorable
change in exchange rates of several currencies including the Russian Ruble relative to the U.S. Dollar. In Africa,
revenue increased as a result of activity growth and share gains across most of the region, predominately in West
Africa. These increases were slightly offset by activity declines in Libya due to political instability during the third
quarter of 2014. In Continental Europe, revenue growth was driven by increased demand for our completion and
production product lines. In the Russia Caspian region, revenue growth was driven by increased activity in our
completion and production product lines.
EARC profit before tax increased $30 million or 5% in 2014 compared to 2013. Incremental profitability growth
from increased revenue was almost entirely offset by a $58 million charge associated with the restructuring of our
operations in North Africa and impairment of certain assets, mainly due to the recent disruption in our operations in
Libya. Profitability was also negatively impacted by foreign exchange losses as a result of the devaluation of
several currencies, including the Russian Ruble.
Middle East/Asia Pacific
MEAP revenue increased $597 million or 15% in 2014 compared to 2013, while the corresponding rig count
increased only 7% over the same period. We posted strong revenue growth in virtually all geographies, most
notably in Saudi Arabia, Iraq, the Arabian Gulf, Southeast Asia and China. In Saudi Arabia, revenue increases were
primarily related to activity growth in our integrated operations contracts. In addition, we experienced strong
demand for our drilling services and completion services product lines. In Iraq, revenue increased in 2014 over the
prior year, as 2013 was negatively impacted by a significant disruption in operations in the fourth quarter partially
offset by a decline in activity in 2014 due to a demobilization on a major contract. Revenue increased in the Arabian
Gulf due to increased demand for our drilling services and pressure pumping product lines in the United Arab
Emirates and India. Within Asia Pacific, revenue growth was strongest in South East Asia and China,
predominately in our drilling services product line.
MEAP profit before tax improved $218 million or 48% in 2014 compared to 2013. The primary driver of the
increase in profit before tax was higher incremental profit on increased revenue across the segment, most notably
in Saudi Arabia and Iraq. Further, we experienced a favorable shift in product mix with a higher proportion of
revenue derived from our drilling services product line. Profit before tax in 2013 was negatively impacted by $79
million of losses in Iraq related to the significant disruption to our operations, expenses associated with personnel
movements and security measures, and other non-recurring items.
Industrial Services
Industrial Services revenue increased 7% and profit before tax decreased 12% in 2014 compared to 2013. The
increase in revenue was primarily driven by the acquisition of a complementary pipeline services business in the