Schlumberger Ltd. (NYSE:SLB)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes demonstrated a significant improvement over the analyzed period. In 2020, the figure was negative at -11,275 million US dollars, indicating substantial operating losses. However, from 2021 onwards, NOPAT turned positive and exhibited a consistent upward trend each year, reaching 4,815 million US dollars by the end of 2024. This reflects a recovery and strengthening of operating profitability over the five-year span.

Cost of Capital

The cost of capital showed an increasing trend initially, rising from 13.16% in 2020 to a peak of 17.86% in 2022. Thereafter, it slightly declined to 17.12% by 2024. Despite this slight reduction in the latter years, the cost of capital remained elevated compared to 2020 levels, indicating relatively higher financing costs or risk perceptions during this timeframe.

Invested Capital

Invested capital exhibited moderate growth throughout the period analyzed. Starting at 33,428 million US dollars in 2020, it slightly decreased in 2021 but increased steadily afterward, reaching 39,383 million US dollars by the end of 2024. This indicates ongoing investment and expansion of the capital base over the years.

Economic Profit

Economic profit remained negative throughout the period, though it showed clear improvement. Beginning at -15,675 million US dollars in 2020, economic profit loss narrowed substantially by 2021. Subsequent years continued this trend of decreasing negative economic profit, with the figure reaching -1,926 million US dollars by 2024. Despite continuous losses, the narrowing gap suggests improving value creation, though the company has not yet achieved positive economic profit reflecting returns above its cost of capital.

Net income (loss) attributable to SLB

The net income attributable to SLB demonstrates a significant recovery trend over the observed period. In 2020, the company reported a substantial loss of approximately 10.5 billion US dollars. However, this was followed by a marked turnaround in 2021, reaching a positive net income of about 1.9 billion US dollars. The subsequent years show consistent growth, with net income increasing to 3.4 billion in 2022, 4.2 billion in 2023, and 4.5 billion US dollars in 2024. This progression indicates improving profitability and effective management responses to prior challenges.

Net operating profit after taxes (NOPAT)

NOPAT mirrors the trends observed in net income, starting from a significant negative value of around 11.3 billion US dollars in 2020. Following this, there is a steady and considerable improvement, with the figure rising to approximately 2.3 billion in 2021. The upward trajectory continues through 2022 to 2024, with NOPAT reaching 3.8 billion, then 4.6 billion, and finally stabilizing near 4.8 billion US dollars. This consistent increase highlights enhanced operational efficiency and profitability after tax expenses.

Overall Observations

Both key profitability metrics exhibit a substantial recovery from profound losses in 2020 to solid gains by 2024. The steady annual increases suggest that the company implemented effective strategies to reverse losses and improve financial health. The close alignment between net income and NOPAT trends indicates sound operational performance and improved tax management over the period analyzed.

The financial data indicates a consistent and rising trend in the tax expense (benefit) over the observed periods. Starting from a negative tax expense (benefit) of -812 million US dollars in 2020, the figure turned positive and increased substantially to 446 million in 2021. Thereafter, the tax expense showed a steady upward trajectory, reaching 779 million in 2022, 1007 million in 2023, and further climbing to 1093 million in 2024. This progression suggests an improvement in profitability or taxable income over the years, as tax expenses tend to correlate positively with earnings before tax.

In parallel, cash operating taxes also exhibited a similar expanding trend. Beginning at 546 million US dollars in 2020, cash operating taxes rose moderately to 579 million in 2021, followed by a significant increase to 905 million in 2022. This growth continued in 2023 with cash operating taxes amounting to 1070 million, and further to 1211 million in 2024. The consistent increase in cash operating taxes aligns with the upward movement in reported tax expense, indicating sustained growth in taxable cash flows and possibly improved operational performance.

The simultaneous increase observed in both tax expense and cash operating taxes over the five-year period reflects an overall positive financial trajectory. The data implies enhanced earnings capacity, higher taxable income, and an expanding tax liability footprint, which typically signals operational growth and improving economic conditions for the company.

Total reported debt & leases

There is a consistent downward trend in total reported debt and leases from 2020 through 2023, decreasing from 17,897 million USD in 2020 to 12,775 million USD in 2023. In 2024, the debt level stabilized, showing a slight increase to 12,816 million USD. Overall, this indicates a reduction in leverage over the five-year period, with a significant decrease in the first three years followed by stabilization.

Total SLB stockholders’ equity

Stockholders’ equity exhibits a steady and significant upward trend throughout the entire period. It grew from 12,071 million USD in 2020 to 21,130 million USD in 2024, showing sustained capital accumulation and increased net asset value. This growth suggests strengthening financial stability and potentially successful retention of earnings or capital infusions.

Invested capital

Invested capital showed a slight decline from 33,428 million USD in 2020 to 32,896 million USD in 2021, followed by a modest increase to 33,931 million USD in 2022. From 2022 onward, the invested capital rose noticeably, reaching 39,383 million USD in 2024. This trend implies increasing investment activities or asset base expansion in the latter years, reflecting growth initiatives or capital expenditures.

The analysis of the financial data reveals several notable trends over the five-year period from 2020 to 2024. Economic profit shows a substantial negative value in all years but exhibits a consistent improvement trend. In 2020, the economic profit was significantly negative at -15,675 million US dollars, which improved dramatically by 2021 to -3,042 million US dollars. Following this, the losses gradually decreased each year, reaching -1,926 million US dollars in 2024.

The invested capital demonstrates a steady increase throughout the period. Starting at 33,428 million US dollars in 2020, it slightly decreased in 2021 to 32,896 million US dollars but resumed growth afterwards, climbing to 39,383 million US dollars by 2024. This upward trend in invested capital indicates increased asset investment or expansion activities over the years.

The economic spread ratio, which reflects the degree of return over the cost of capital, is consistently negative yet shows a trend of continuous improvement. From a large negative spread of -46.89% in 2020, it significantly improved to -9.25% in 2021, and further narrowed to -4.89% by 2024. This ratio's improvement suggests better efficiency or increased profitability relative to the cost of capital, although it remains below zero, indicating economic losses.

Summary

The company has experienced persistent economic losses as reflected by negative economic profit values, although these losses have been steadily decreasing, indicating an improvement in profitability or cost management. Meanwhile, the invested capital has expanded consistently after a minor dip in 2021, pointing towards ongoing investments or growth initiatives. The economic spread ratio's steady improvement, despite remaining negative, emphasizes a positive trend in the company’s financial returns relative to its capital costs, suggesting progress toward operational efficiency and value creation.

The financial data reveals several notable trends over the five-year period.

Revenue

Revenue has shown a consistent upward trend from 2020 to 2024. Starting at 23,601 million US dollars in 2020, it slightly declined to 22,929 million in 2021 but subsequently increased significantly each year, reaching 36,289 million by 2024. This indicates a strong recovery and growth in sales or service activities over the period.

Economic Profit

Economic profit, measured in millions of US dollars, has improved steadily but remained negative throughout the period. The loss decreased from -15,675 million in 2020 to -1,926 million in 2024. This reduction in economic losses suggests improving efficiency or value creation, although the company did not achieve positive economic profit within this timeframe.

Economic Profit Margin

The economic profit margin, expressed as a percentage, similarly showed a positive trend. It started at a significantly negative margin of -66.42% in 2020, improving to -5.31% by 2024. Although still negative, the shrinking margin deficit indicates the company is moving closer to breaking even on an economic profit basis relative to revenues.

In summary, while revenue growth has been robust and consistent, economic profitability remains negative but has shown meaningful improvement. The continuous reduction in both the absolute economic profit loss and the economic profit margin deficit highlights a promising trajectory towards potential future profitability. This improvement over time reflects enhanced operational performance or changes in cost structure, although further progress is required to achieve positive economic returns.