SLB N.V. (NYSE:SLB)

The financial performance over the observed periods demonstrates a marked recovery and gradual improvement in key operating profitability measures, though challenges in generating positive economic profit persist.

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows a significant turnaround from a substantial loss of approximately US$11,275 million in the earliest period to positive figures in subsequent years. From 2021 onwards, NOPAT increased steadily, reaching US$4,815 million by the end of the most recent period, indicating improving operational efficiency and profitability.

Cost of Capital

The cost of capital percentage increased from 13.18% initially to a peak of 17.89% in 2022, before showing a slight decline to 17.14% by the final period. This trend suggests rising capital costs initially, likely reflecting increased risk perceptions or changes in market conditions, followed by a modest easing in the cost pressures.

Invested Capital

The invested capital fluctuated moderately, starting at US$33,428 million, dipping slightly in the following year, then increasing progressively to US$39,383 million by the end of the last period. This upward trend in invested capital indicates ongoing investment or asset growth, supporting the company’s operating activities.

Economic Profit

Despite improvements in NOPAT, the economic profit remained negative across all years, although the magnitude of losses decreased substantially from a significant deficit of US$15,682 million to a loss of US$1,937 million by the most recent period. This suggests that while the company is generating operating profits, it still struggles to fully cover its cost of capital, though the gap is narrowing.

Overall, the data points to a positive trajectory in operational performance and invested resources, with a persistent but decreasing challenge in achieving value creation beyond the cost of capital. Continued focus on enhancing profitability relative to the capital employed will be critical to transition into positive economic profit territory.

The financial performance over the five-year period demonstrates a significant turnaround and continued improvement. Initially, there was a substantial net loss attributable to the company, followed by positive net income figures in subsequent years that increased steadily. This positive trend in net income is indicative of enhanced profitability and operational efficiency.

Similarly, the net operating profit after taxes (NOPAT) reflects a comparable trajectory. The initial negative value suggests operational challenges; however, subsequent values indicate recovery and growth. The NOPAT consistently increased year over year, suggesting improved operational management and a stronger ability to generate profit from core activities after accounting for taxes.

Net Income (Loss) Attributable to the Company

The net income was significantly negative in the initial year, reflecting considerable losses. From the following year onward, the company achieved positive net income that increased each year, reaching the highest value in the final reported year. This consistent growth highlights successful efforts in boosting profitability and possibly the impact of strategic initiatives or market conditions favoring the company.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures mirror the profit improvement seen in net income. Starting with a large operating loss, NOPAT turned positive in the second year and grew progressively each year. This metric suggests the company not only recovered from its operating losses but also enhanced its core operational efficiency, resulting in increased post-tax operating profits.

Overall, the data suggest a positive operational turnaround and financial strengthening over the period, with marked improvements in profitability and operational effectiveness. The upward trends in both net income and NOPAT indicate that the company has managed to overcome initial difficulties and establish a trajectory of sustainable growth.

Tax Expense (Benefit) Trend

The tax expense demonstrated a significant shift from a negative value of -812 million US dollars in 2020 to positive values in subsequent years. Specifically, it increased to 446 million in 2021, followed by a further rise to 779 million in 2022. This upward trajectory continued with 1,007 million in 2023 and reached 1,093 million in 2024. This trend indicates a transition from a tax benefit or credit situation in 2020 towards steadily increasing tax liabilities over the following periods.

Cash Operating Taxes Trend

Cash operating taxes exhibited a consistent upward trend across the five-year period. Beginning at 546 million US dollars in 2020, it increased moderately to 579 million in 2021. This increase became more pronounced in 2022 with a rise to 905 million. The subsequent years recorded further increases to 1,070 million in 2023 and 1,211 million in 2024. The data suggests growing cash outflows related to tax obligations, reflecting increasing taxable income or changes in tax regulations.

Overall Tax Position

Collectively, the data reveals a clear pattern of increasing tax-related expenses. The movement from a tax benefit in 2020 to steadily higher tax expenses and cash operating taxes over five years suggests improving profitability or changing tax circumstances that require greater tax payments. The consistent increase in cash operating taxes aligns with the growing tax expense, underscoring a heightened cash burden related to taxation.

The financial data reveals notable trends in key components of the company's capital structure and invested capital over a five-year period, from December 31, 2020, through December 31, 2024.

Total reported debt & leases

This figure shows a consistent decline from US$17,897 million at the end of 2020 to US$12,925 million by the end of 2022. Thereafter, it stabilizes with minimal fluctuations, holding steady at around US$12,775 to US$12,816 million through 2023 and 2024. This trend indicates a substantial reduction in leverage or debt obligations in the initial years, followed by a period of debt stabilization.

Total SLB stockholders’ equity

Equity exhibits a strong upward trajectory, increasing from US$12,071 million in 2020 to US$21,130 million in 2024. The progression is steady year-over-year, representing significant growth in the company’s net assets and possibly reflecting retained earnings, capital injections, or other equity-enhancing activities.

Invested capital

The invested capital metric shows a moderate increase from US$33,428 million in 2020 to US$39,383 million in 2024. There is a slight dip observed in 2021, but following that, the invested capital consistently increases year by year, with a notable rise from 2022 onward. This pattern indicates an overall expansion in the assets deployed in the business, suggesting ongoing investment activities and possible growth initiatives.

Overall, the data indicates a strengthening in the company’s financial position characterized by a reduction in debt levels during the early years alongside steady growth in equity and invested capital. The stable debt levels in later years combined with increasing equity and invested capital suggest improved capital structure management and potentially enhanced financial flexibility.

Economic Profit

The economic profit showed a significant improvement over the five-year period, moving from a substantial negative value of -15,682 million US dollars in 2020 to a less negative figure of -1,937 million US dollars in 2024. This trend indicates a reduction in the economic loss, suggesting that the company is moving closer to achieving breakeven or positive economic profit, although it remains negative as of the latest period.

Invested Capital

Invested capital experienced a gradual increase from 33,428 million US dollars in 2020 to 39,383 million US dollars in 2024. Despite some fluctuations, the overall upward trend suggests ongoing investment and asset growth, which may reflect expansion, modernization efforts, or increased operational capacity.

Economic Spread Ratio

The economic spread ratio improved consistently, showing a decline in the negative percentage from -46.91% in 2020 to -4.92% in 2024. This denotes a narrowing gap between the company's return on invested capital and its cost of capital, indicating enhanced operational efficiency or improved profitability relative to invested capital, although the ratio remains below zero by the end of the period.

Overall Analysis

The data reveals a positive trend in key financial performance indicators, with economic losses decreasing in magnitude and the spread ratio moving closer to neutrality. The steady increase in invested capital suggests continued commitment to growth or asset base expansion. However, the persistent negative economic profit and economic spread ratio indicate that the company has yet to achieve positive economic value generation as of the last reported period.

Revenue Trends

Revenue demonstrated a continuous and substantial increase over the five-year period. Starting at US$23,601 million in 2020, it rose steadily each year, reaching US$36,289 million by 2024. This indicates a strong upward trajectory in sales or service income, reflecting either market expansion, improved operations, or pricing strategies.

Economic Profit Analysis

Economic profit, expressed in millions of US dollars, was negative across all years but showed a significant improvement over time. The loss narrowed from -15,682 million in 2020 to -1,937 million in 2024, indicating a positive trend toward reducing economic losses. This improvement suggests enhanced cost management, better capital allocation, or increasing operational efficiency.

Economic Profit Margin

The economic profit margin, which is the economic profit divided by revenue expressed as a percentage, also exhibited a notable improvement. It moved from a deeply negative margin of -66.45% in 2020 to -5.34% in 2024, signifying that although the company remained unprofitable on an economic profit basis, it was approaching breakeven. The narrowing margin underscores the company's efforts to improve profitability relative to its revenue base.

Overall Insights

Despite consistently negative economic profits, the data reflects a clear and sustained reduction in economic losses over the reviewed period. Concurrently, revenue growth was strong and consistent, contributing to the improvement in economic profit margin. The trajectory suggests operational or strategic enhancements that have progressively mitigated inefficiencies or high costs impacting economic profitability. Continued focus on these factors may eventually lead to positive economic profit in future periods.