SLB N.V. (NYSE:SLB)

The income tax expense (benefit) exhibited an overall increasing trend from 2021 to 2023, followed by stabilization and a subsequent decrease in the most recent period presented. A closer examination of the components reveals differing patterns in current and deferred tax effects.

Current Tax

Current tax expense consistently increased from US$477 million in 2021 to US$1,134 million in 2023. This growth suggests a corresponding increase in pre-tax income subject to current taxation. The rate of increase slowed between 2022 and 2023. In 2024, current tax expense remained relatively stable at US$1,134 million, and decreased slightly to US$1,119 million in 2025.

Deferred Tax

Deferred tax exhibited more volatility. It began as a relatively small expense of US$31 million in 2021 and US$39 million in 2022. A significant shift occurred in 2023, with deferred tax becoming a benefit of US$28 million. This trend reversed in 2024, resulting in a deferred tax expense of US$41 million. The most substantial change occurred in 2025, where deferred tax became a significant expense of US$279 million. This large deferred tax expense in 2025 suggests the recognition of taxable temporary differences or a change in deferred tax asset valuations.

Total Tax Expense (Benefit)

The combined effect of current and deferred taxes resulted in a total tax expense of US$446 million in 2021, increasing to US$779 million in 2022 and peaking at US$1,007 million in 2023. The total tax expense remained high in 2024 at US$1,093 million, before decreasing to US$840 million in 2025. The decrease in 2025 is primarily attributable to the substantial deferred tax expense offsetting the current tax expense.

The fluctuations in deferred tax suggest changes in temporary differences between the book and tax bases of assets and liabilities, or alterations in tax planning strategies. The increasing current tax expense from 2021 to 2023 aligns with potential growth in taxable income, while the stabilization and subsequent decrease in 2024 and 2025 warrant further investigation to determine the underlying drivers.

The effective income tax rate (EITR) is influenced by a variety of factors, with notable shifts observed between 2021 and 2025. While the United States statutory federal tax rate remains constant at 21.00% throughout the period, fluctuations in international tax rates and adjustments contribute to the overall EITR.

International Tax Rate Impact

Several international jurisdictions exhibit varying tax rates. The United Arab Emirates, Saudi Arabia, and Norway show negative tax rates in 2023, indicating potential benefits or tax treaties. These negative rates generally lessen over time, with Saudi Arabia and the United Arab Emirates showing increases towards zero, and Norway becoming positive by 2025. Ecuador, the British Virgin Islands, and Russia also contribute to the EITR, with rates fluctuating annually. The impact of “Other jurisdictions” shifts from a negative effect in 2023 to a positive one in 2025.

Tax Adjustments

Several adjustments impact the EITR. Dividend withholding tax is present from 2023 onwards, starting at 2.00% and decreasing to 1.40% by 2025. “Other” adjustments also contribute, increasing from 0.90% in 2023 to 1.50% in 2024 before decreasing to 0.20% in 2025. Tax credits consistently reduce the EITR, becoming more substantial over time, moving from -0.40% to -0.80% by 2025.

Significant Adjustments & Valuation Allowance

A charge/credit of -1.00% is noted in 2022. The change in valuation allowance demonstrates a significant impact, particularly in 2022 (-2.00%) and 2025 (-3.10%), suggesting changes in the realizability of deferred tax assets. Nontaxable or nondeductible items fluctuate, starting at 0.30% in 2023, decreasing to -0.60% in 2024, and then recovering to 0.10% in 2025. Changes in unrecognized tax benefits consistently reduce the EITR, decreasing from -1.40% in 2023 to -0.10% in 2025. Other adjustments were -2.00% in 2021, and then become negative again in 2023 and 2024, before becoming less negative in 2025.

Overall Effective Tax Rate Trend

The EITR begins at 19.00% in 2021, decreases to 18.00% in 2022, and then increases steadily to 19.60% in 2025. This increase is likely attributable to the combined effect of shifting international tax rates, adjustments to valuation allowances, and changes in other adjustments. Non-US tax effects contribute positively to the EITR, increasing from 1.20% in 2023 to 2.60% in 2025.

The interplay of these factors results in a relatively stable, but gradually increasing, EITR over the observed period. The impact of valuation allowance changes and international tax rate fluctuations are particularly noteworthy.

The composition of net deferred tax assets and liabilities exhibits notable shifts over the five-year period. A general trend towards increasing net deferred tax liabilities is apparent, particularly in the later years of the observed timeframe. Several components contribute to this overall movement, with varying degrees of influence throughout the period.

Intangible Assets

Deferred tax liabilities related to intangible assets consistently represent a significant portion of the net deferred tax position. These liabilities decreased from US$855 million in 2021 to US$758 million in 2024, before increasing substantially to US$1,208 million in 2025. This suggests ongoing activity related to the recognition of intangible assets and their associated tax implications.

Net Operating Losses

Net operating loss carryforwards contribute to deferred tax assets. These assets decreased steadily from US$427 million in 2021 to US$123 million in 2024, with a slight increase to US$153 million in 2025. This decline indicates a utilization of these losses against future taxable income, or potentially, expiration of some loss carryforwards.

Fixed Assets

Deferred tax assets associated with fixed assets demonstrate volatility. Beginning at US$151 million in 2021, the amount decreased to US$101 million in 2022, then increased to US$190 million in 2023, followed by a decrease to US$106 million in 2025. This fluctuation likely reflects changes in depreciation methods, asset disposals, or investment patterns.

Research and Development

Deferred tax assets related to research and development activities show an increasing trend. Research and development credits increased from US$118 million in 2021 to US$162 million in 2023, before decreasing to US$87 million in 2025. Capitalized research and development costs, a newer component, began at US$72 million in 2022 and grew to US$255 million in 2025, indicating increased investment in this area and associated tax benefits.

Pension and Other Postretirement Benefits

Deferred tax liabilities related to pension and other postretirement benefits decreased consistently from US$136 million in 2021 to US$62 million in 2024, then increased slightly to US$71 million in 2025. This suggests a reduction in the projected benefit obligations or changes in actuarial assumptions.

Investments in Non-US Subsidiaries & Foreign Tax Credits

Deferred tax liabilities from investments in non-US subsidiaries emerged in 2024, reaching US$194 million in 2025. This suggests increased earnings in these subsidiaries that are not immediately repatriated. The emergence of foreign tax credits in 2025 (US$63 million) may partially offset these liabilities.

Other, Net

The “Other, net” component remains relatively stable, fluctuating between US$77 million and US$205 million over the period. This category represents a collection of smaller deferred tax items and does not exhibit a strong directional trend.

The net deferred tax position moved from a liability of US$94 million in 2021 to a significantly larger liability of US$644 million in 2025. This substantial increase is primarily driven by the growth in deferred tax liabilities related to intangible assets and investments in non-US subsidiaries, coupled with the utilization of net operating loss carryforwards.

Noncurrent deferred tax liabilities exhibited considerable fluctuation over the five-year period. Initial values decreased before a substantial increase towards the end of the observed timeframe.

Trend Analysis

The balance of noncurrent deferred tax liabilities decreased from US$94 million in 2021 to US$61 million in 2022, representing a reduction of approximately 35%. A subsequent increase was noted in 2023, rising to US$140 million. This upward trend continued, though at a slower pace, with a value of US$67 million reported in 2024. However, a significant surge occurred in 2025, reaching US$644 million. This represents a substantial increase compared to prior years and indicates a potentially significant shift in the underlying temporary differences creating these liabilities.

Magnitude of Change

The most pronounced change occurred between 2024 and 2025, with an increase of US$577 million. The increase from 2022 to 2023 was also notable, at US$79 million. The initial decrease from 2021 to 2022 was the only observed reduction in the balance during the period.

Potential Implications

The substantial increase in noncurrent deferred tax liabilities in 2025 warrants further investigation. This could be attributable to various factors, including changes in tax laws, acquisitions, or alterations in the recognition of temporary differences. The company should assess the nature of these liabilities and their potential impact on future taxable income.

The information presents a five-year trend of reported and adjusted financial statement items. The adjustments primarily relate to the removal of deferred tax assets and liabilities, impacting reported total liabilities, total stockholders’ equity, and net income attributable to the company. A consistent pattern emerges where the adjusted figures differ from the reported figures each year, indicating a material impact from these tax-related adjustments.

Total Liabilities

Reported total liabilities demonstrate a generally stable trend, fluctuating between approximately US$25.1 billion and US$27.6 billion over the period. The adjusted total liabilities follow a similar pattern, consistently lower than the reported values by approximately US$94 million in 2021, increasing to approximately US$644 million in 2025. This suggests a growing deferred tax impact reducing the reported liability position.

Total Stockholders’ Equity

Reported total stockholders’ equity exhibits a clear upward trend, increasing from US$15.0 billion in 2021 to US$26.1 billion in 2025. The adjusted equity also increases over the same period, starting at US$15.1 billion and reaching US$26.8 billion in 2025. The difference between reported and adjusted equity widens over time, starting at approximately US$94 million in 2021 and growing to approximately US$644 million in 2025, mirroring the trend observed in total liabilities. This indicates that the removal of deferred tax items increases reported equity.

Net Income

Reported net income attributable to the company shows an increasing trend from US$1.9 billion in 2021 to US$4.5 billion in 2023, followed by a decrease to US$3.4 billion in 2025. The adjusted net income follows a similar trajectory, consistently lower than the reported net income. The difference between reported and adjusted net income is relatively small in 2021 and 2022 (approximately US$31 million and US$39 million respectively), but increases to approximately US$28 million in 2023 and US$280 million in 2025. This suggests that deferred tax adjustments have a growing impact on reported profitability.

In summary, the adjustments consistently reduce reported liabilities and increase reported equity and net income. The magnitude of these adjustments increases over the five-year period, suggesting a growing impact from the removal of deferred tax items. This trend warrants further investigation to understand the underlying reasons for the increasing deferred tax adjustments and their implications for the company’s financial position and performance.

The financial metrics demonstrate a generally consistent relationship between reported and adjusted values across the observed period. Adjustments, primarily related to the removal of deferred tax impacts, result in modest variations to profitability and return ratios. Overall, the trends observed in the adjusted figures largely mirror those of the reported figures, suggesting that deferred taxes, while present, do not fundamentally alter the underlying performance narrative.

Profitability

Reported net profit margin increased from 8.20% in 2021 to 12.68% in 2023, before declining to 9.45% in 2025. The adjusted net profit margin follows a similar trajectory, moving from 8.07% to 12.77% and then to 8.67%. The difference between reported and adjusted margins remains relatively small throughout the period, typically less than 0.20 percentage points. This indicates a consistent, though limited, impact from deferred tax adjustments on reported profitability.

Financial Leverage

Reported financial leverage decreased steadily from 2.77 in 2021 to 2.10 in 2025. The adjusted financial leverage exhibits a parallel downward trend, starting at 2.75 and ending at 2.05. The adjustments for deferred taxes have a minimal effect on the reported leverage ratio, with differences consistently below 0.02. This suggests that deferred tax assets and liabilities do not significantly influence the company’s capital structure as measured by this ratio.

Return on Equity (ROE)

Reported ROE increased significantly from 12.54% in 2021 to a peak of 21.11% in 2024, then decreased to 12.92% in 2025. The adjusted ROE mirrors this pattern, rising from 12.25% to 20.85% and subsequently falling to 11.57%. The adjustments consistently result in a slightly lower ROE, but the overall trend remains the same. The largest difference between reported and adjusted ROE occurs in 2025, at 1.35 percentage points.

Return on Assets (ROA)

Reported ROA increased from 4.53% in 2021 to 9.12% in 2024, before decreasing to 6.15% in 2025. The adjusted ROA follows a similar pattern, moving from 4.46% to 9.03% and then to 5.64%. The impact of deferred tax adjustments on ROA is consistently small, with the difference between reported and adjusted values remaining below 0.08 percentage points throughout the period.

In conclusion, the adjustments for deferred taxes result in minor modifications to the reported financial ratios. The underlying trends in profitability, leverage, and returns remain consistent whether considering reported or adjusted figures. This suggests that deferred taxes, while present, do not materially distort the overall financial picture.

The period under review demonstrates fluctuations in both reported and adjusted net income attributable to SLB, alongside corresponding changes in net profit margins. Both reported and adjusted net income generally increased from 2021 to 2023, before exhibiting a decline in 2025. The adjusted net profit margin closely mirrors this trend.

Reported Net Profit Margin

The reported net profit margin increased from 8.20% in 2021 to a peak of 12.68% in 2023. A subsequent decrease is observed, falling to 9.45% in 2025. This suggests a diminishing profitability relative to revenue in the latter years of the period.

Adjusted Net Profit Margin

The adjusted net profit margin follows a similar pattern to the reported margin, beginning at 8.07% in 2021 and reaching 12.77% in 2023. It then decreased to 8.67% in 2025. The adjusted margin consistently remains slightly below the reported margin throughout the observed period.

Relationship between Reported and Adjusted Margins

The difference between the reported and adjusted net profit margins remains relatively small across all years, indicating that adjustments to net income do not significantly alter the overall profitability picture. The consistent, albeit minor, difference suggests a recurring pattern in the types of items requiring adjustment.

The peak profitability observed in 2023 is followed by a noticeable decline in both reported and adjusted net profit margins by 2025. Further investigation would be required to determine the underlying drivers of this decline, such as changes in revenue, cost of goods sold, or operating expenses.

Analysis reveals a consistent trend in both reported and adjusted stockholders’ equity over the five-year period. Both metrics demonstrate growth annually, with a notable acceleration in the final two years examined. Reported stockholders’ equity increased from US$15,004 million in 2021 to US$26,109 million in 2025, while adjusted stockholders’ equity grew from US$15,098 million to US$26,753 million over the same timeframe. The difference between reported and adjusted equity remains relatively small throughout the period, suggesting the adjustments are not materially impacting the overall equity position.

Reported Financial Leverage

Reported financial leverage exhibits a decreasing trend from 2.77 in 2021 to 2.10 in 2025. The rate of decline is more pronounced in the earlier years, slowing down in 2024 and 2025. This indicates a strengthening of the company’s financial position, as the ratio suggests a decreasing reliance on financial leverage to support assets.

Adjusted Financial Leverage

Adjusted financial leverage mirrors the trend observed in reported financial leverage, decreasing from 2.75 in 2021 to 2.05 in 2025. The adjusted leverage ratio consistently remains slightly below the reported leverage ratio across all periods. The pattern of decline is similar to the reported leverage, with a more rapid decrease initially followed by a slower reduction in the later years. This corroborates the conclusion that the company is reducing its financial risk.

The parallel movements in reported and adjusted financial leverage suggest that the adjustments made to stockholders’ equity do not significantly alter the overall assessment of the company’s leverage position. The consistent downward trend in both ratios indicates a positive development in the company’s capital structure, suggesting improved financial stability and reduced risk over the analyzed period.

Over the five-year period, both reported and adjusted net income attributable to the company demonstrate a general increasing trend, though with fluctuations. Reported net income increased from US$1,881 million in 2021 to US$4,461 million in 2024 before decreasing to US$3,374 million in 2025. Adjusted net income followed a similar pattern, rising from US$1,850 million in 2021 to US$4,420 million in 2024, and then declining to US$3,095 million in 2025. Total stockholders’ equity, both reported and adjusted, consistently increased throughout the period, with a notable acceleration in growth between 2024 and 2025. This growth in equity is more pronounced in the adjusted figures. Consequently, both reported and adjusted return on equity (ROE) exhibited an initial increase followed by a decline in the final year.

Reported ROE

Reported ROE increased from 12.54% in 2021 to a peak of 21.11% in 2024, indicating improved profitability relative to equity. However, a substantial decrease to 12.92% was observed in 2025, driven by the decline in reported net income despite continued growth in equity. This suggests that while the company was becoming more profitable relative to its equity for the first three years, the profitability gains were not sustained in the final year.

Adjusted ROE

Adjusted ROE mirrored the trend of reported ROE, rising from 12.25% in 2021 to 20.85% in 2024. A significant decrease to 11.57% occurred in 2025, mirroring the decline in adjusted net income. The adjusted ROE figures are consistently slightly lower than the reported ROE figures across all years, indicating that adjustments to net income and equity have a moderating effect on the calculated return.

Relationship between Net Income and ROE

The decrease in both reported and adjusted ROE in 2025 is primarily attributable to the decline in net income. While equity continued to grow, the reduction in earnings outweighed this effect, resulting in a lower return on equity. This suggests that the company’s profitability was impacted in 2025, potentially due to external factors or internal operational challenges.

Equity Growth

The consistent growth in both reported and adjusted total stockholders’ equity suggests a strengthening financial position. The accelerated growth in equity between 2024 and 2025, particularly in the adjusted figures, could be due to factors such as retained earnings, stock issuances, or other equity transactions. Further investigation would be needed to determine the specific drivers of this growth.

Reported net income attributable to SLB demonstrates an increasing trend from 2021 to 2023, peaking at US$4,203 million, before experiencing a decline in 2025 to US$3,374 million. Adjusted net income follows a similar pattern, rising from US$1,850 million in 2021 to US$4,231 million in 2023, and subsequently decreasing to US$3,095 million in 2025. The difference between reported and adjusted net income remains relatively consistent across the observed period.

Reported Return on Assets (ROA)

Reported ROA exhibits a consistent upward trajectory from 4.53% in 2021 to a high of 9.12% in 2024. A subsequent decrease is observed in 2025, with ROA falling to 6.15%. This suggests a strengthening of profitability relative to assets until 2024, followed by a reduction in efficiency or profitability in the final year.

Adjusted Return on Assets (ROA)

Adjusted ROA mirrors the trend of reported ROA, increasing from 4.46% in 2021 to 9.03% in 2024, and then declining to 5.64% in 2025. The adjusted ROA values are consistently slightly lower than the reported ROA values for each year, indicating that adjustments to net income have a modest downward impact on the calculated return. The correlation between reported and adjusted ROA suggests that the adjustments are consistently applied and do not fundamentally alter the overall profitability trend.

The convergence of the reported and adjusted ROA trends indicates that the adjustments made to net income do not significantly alter the overall assessment of asset utilization and profitability. The decline in both reported and adjusted ROA in 2025 warrants further investigation to determine the underlying causes, such as changes in asset base, revenue generation, or cost structure.