US engineering giant GE has seen profit in its oil & gas segment slashed last year, amid lower revenues due to the "challenging industry".

GE recorded a 22% drop in oil and gas revenues year-on-year to $12.8 billion from $16.4 billion in the same period last year amid "lower volumes and price".

Profit for this segment was $1.4 billion, 43% lower than last year’s $2.4 billion, as US onshore rig count was essentially flat due to “continued challenges in the oil and gas industry” GE said.

However, for the first time in two years, the company reported growth in orders for the unit, which is “encouraging”, the group said.

"Challenges continue in the oil and and gas sector, but orders here have been in line with expectations," GE said. "Looking forward we expect a more balanced supply and demand environment, mostly due to the recent Opec and non-Opec output cuts deal."

"Last year was an extremely difficult year," GE said, however the group added that it expects "modest improvements in 2017". "The first part of the year will be challenging as market pressure continues, but we expect improvements as we move to the second part of the year," it said.

Despite the impact to GE’s business, the US giant recorded overall revenues of $123 billion in the quarter, a 5% increase compared to $117 billion last year.

Profit for the year also saw improvements. GE saw overall net earnings of $8 billion for 2016, compared for a loss of $6 billion in the previous year.

The results were mostly due to big improvements for GE’s renewable energy unit, which recorded the highest growth last year. Revenues were up 44% year-on-year to $9 billion, and profit for this segment was $576 million, a 34% boost compared to a profit of $431 million in the same quarter last year.

Meanwhile, the company’s plans to merge with Baker Hughes is moving along.

The new Baker Hughes company, with $32 billion of combined revenue and operations in more than 120 countries, will be majority owned by GE Oil & Gas, and the deal is expected to close mid-year.

GE will own 62.5% in the new company, with Baker Hughes holding the balance of 37.5%.

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GE profit slashed