Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
SLB N.V., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 3,544 – 12.62% × 44,371 = -2,056
The analysis of economic profit reveals a period of recovery and near-stabilization followed by a significant deterioration in value creation. Throughout the analyzed period, the entity consistently failed to generate a positive economic profit, indicating that net operating profit after taxes (NOPAT) remained insufficient to cover the cost of invested capital.
- Net Operating Profit After Taxes (NOPAT) Trends
- A strong upward trajectory was observed from 2021 through 2024, with NOPAT increasing from 2,298 million USD to a peak of 4,815 million USD. This growth suggests an improvement in operational efficiency and profitability. However, this trend reversed in 2025, where NOPAT declined to 3,544 million USD, representing a substantial reduction in operating earnings.
- Invested Capital Expansion
- Invested capital exhibited a consistent and uninterrupted increase over the five-year period. Starting at 32,896 million USD in 2021, the capital base grew to 44,371 million USD by 2025. This steady expansion indicates ongoing capital deployment, though the increasing scale of the investment base heightened the threshold required to achieve a positive economic profit.
- Cost of Capital Stability
- The cost of capital remained relatively stable, fluctuating within a narrow range between 11.61% and 12.71%. Despite minor variations, the cost of funding the invested capital showed no significant trend, acting as a consistent hurdle rate for the organization's performance.
- Economic Profit and Value Creation
- Economic profit showed a notable recovery between 2021 and 2024, narrowing from a deficit of 1,523 million USD to a near-break-even position of -1 million USD. This improvement was driven primarily by the growth in NOPAT outpacing the increase in the capital charge. However, 2025 marked a sharp reversal, with economic profit falling to -2,056 million USD. This decline is attributed to the simultaneous occurrence of a reduction in NOPAT and a further increase in invested capital, resulting in the highest level of value destruction observed in the period.
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Net Operating Profit after Taxes (NOPAT)
SLB N.V., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in equity equivalents to net income attributable to SLB.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 905 × 4.00% = 36
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 594 × 21.00% = 125
6 Addition of after taxes interest expense to net income attributable to SLB.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 136 × 21.00% = 29
8 Elimination of after taxes investment income.
Net income attributable to SLB and net operating profit after taxes (NOPAT) both demonstrate positive performance over the analyzed period, though with differing trajectories. NOPAT consistently exceeds net income attributable to SLB across all reported years. Both metrics experienced growth from 2021 to 2023, followed by a leveling off and subsequent decline in the most recent year.
- NOPAT Trend
- NOPAT increased from US$2,298 million in 2021 to US$3,801 million in 2022, representing a substantial growth of approximately 65.7%. This upward trend continued into 2023, with NOPAT reaching US$4,641 million. Further incremental growth was observed in 2024, reaching US$4,815 million. However, 2025 saw a decrease in NOPAT to US$3,544 million, indicating a decline of approximately 26.3% from the peak in 2024.
- Net Income Trend
- Net income attributable to SLB increased from US$1,881 million in 2021 to US$3,441 million in 2022, a growth of approximately 82.9%. The growth continued in 2023, reaching US$4,203 million, and then to US$4,461 million in 2024. Similar to NOPAT, net income decreased in 2025, falling to US$3,374 million, a decline of approximately 24.4% from the 2024 high.
- Relationship between NOPAT and Net Income
- The difference between NOPAT and net income attributable to SLB remains consistently positive throughout the period. This suggests that factors such as interest expense and non-operating items are reducing reported net income relative to core operational profitability as measured by NOPAT. The magnitude of this difference does not exhibit a significant trend over the period, remaining relatively stable in absolute terms.
The observed decline in both NOPAT and net income in 2025 warrants further investigation to determine the underlying causes. Potential factors could include changes in revenue, operating costs, tax rates, or non-operating expenses.
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Cash Operating Taxes
SLB N.V., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The reported tax expense and cash operating taxes demonstrate increasing values from 2021 through 2024, followed by a decrease in 2025. Both metrics exhibit a consistent pattern of growth before the final year’s decline.
- Tax Expense
- Tax expense increased from US$446 million in 2021 to US$1,093 million in 2024, representing a significant rise over the period. This increase suggests potentially higher profitability or changes in applicable tax rates. However, tax expense decreased to US$840 million in 2025, indicating a possible reduction in taxable income or the benefit of tax planning strategies.
- Cash Operating Taxes
- Cash operating taxes followed a similar trajectory to tax expense, rising from US$579 million in 2021 to US$1,211 million in 2024. This indicates an increasing cash outflow related to tax obligations. The value then decreased slightly to US$1,215 million in 2025. The consistency between the 2024 and 2025 values suggests the decrease may not be substantial.
- Relationship between Tax Expense and Cash Operating Taxes
- Cash operating taxes consistently exceeded tax expense across all reported years. This difference could be attributed to timing differences between the recognition of tax expense under accounting standards and the actual cash payments made for taxes. The gap between the two metrics remained relatively stable throughout the period, suggesting a consistent pattern in these timing differences.
The observed trends suggest a period of increasing tax obligations followed by a potential stabilization or slight reduction in 2025. Further investigation into the underlying drivers of these changes, such as profitability, tax rate fluctuations, and tax planning initiatives, would be necessary for a more comprehensive understanding.
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Invested Capital
SLB N.V., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of equity equivalents to total SLB stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of marketable securities.
The reported invested capital demonstrates a consistent upward trend over the five-year period. Simultaneously, changes are observed in the components contributing to this figure, namely total reported debt & leases and total stockholders’ equity.
- Invested Capital Trend
- Invested capital increased from US$32,896 million in 2021 to US$44,371 million in 2025. This represents a cumulative increase of approximately 35% over the period. The growth appears to be accelerating, with larger absolute increases observed in the later years of the period (2023-2025) compared to the earlier years (2021-2023).
- Debt & Leases
- Total reported debt & leases decreased from US$15,009 million in 2021 to US$12,541 million in 2025. The largest decrease occurred between 2021 and 2022, followed by a period of relative stability with minor fluctuations between 2022 and 2024. A further decrease is noted in 2025.
- Stockholders’ Equity
- Total stockholders’ equity exhibited a consistent increase throughout the period, rising from US$15,004 million in 2021 to US$26,109 million in 2025. This represents a cumulative increase of approximately 73%. The rate of increase in stockholders’ equity also appears to be accelerating, mirroring the trend observed in invested capital.
The increase in invested capital, coupled with the decrease in debt and the substantial increase in stockholders’ equity, suggests a shift in the company’s capital structure. The company appears to be relying more on equity financing and less on debt financing. The accelerating growth in both invested capital and stockholders’ equity in the later years of the period may indicate increased investment in operations or acquisitions, funded primarily by equity.
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Cost of Capital
SLB N.V., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 73,496) | 73,496) | ÷ | 85,695) | = | 0.86 | 0.86 | × | 14.30% | = | 12.26% | ||
| Debt3 | 11,294) | 11,294) | ÷ | 85,695) | = | 0.13 | 0.13 | × | 3.12% × (1 – 21.00%) | = | 0.32% | ||
| Operating lease liability4 | 905) | 905) | ÷ | 85,695) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 85,695) | 1.00 | 12.62% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 58,317) | 58,317) | ÷ | 70,510) | = | 0.83 | 0.83 | × | 14.30% | = | 11.83% | ||
| Debt3 | 11,451) | 11,451) | ÷ | 70,510) | = | 0.16 | 0.16 | × | 2.91% × (1 – 21.00%) | = | 0.37% | ||
| Operating lease liability4 | 742) | 742) | ÷ | 70,510) | = | 0.01 | 0.01 | × | 3.80% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 70,510) | 1.00 | 12.23% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 73,753) | 73,753) | ÷ | 85,886) | = | 0.86 | 0.86 | × | 14.30% | = | 12.28% | ||
| Debt3 | 11,323) | 11,323) | ÷ | 85,886) | = | 0.13 | 0.13 | × | 2.57% × (1 – 21.00%) | = | 0.27% | ||
| Operating lease liability4 | 810) | 810) | ÷ | 85,886) | = | 0.01 | 0.01 | × | 3.60% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 85,886) | 1.00 | 12.57% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 79,886) | 79,886) | ÷ | 91,617) | = | 0.87 | 0.87 | × | 14.30% | = | 12.47% | ||
| Debt3 | 11,032) | 11,032) | ÷ | 91,617) | = | 0.12 | 0.12 | × | 2.31% × (1 – 21.00%) | = | 0.22% | ||
| Operating lease liability4 | 699) | 699) | ÷ | 91,617) | = | 0.01 | 0.01 | × | 3.30% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 91,617) | 1.00 | 12.71% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 55,855) | 55,855) | ÷ | 71,478) | = | 0.78 | 0.78 | × | 14.30% | = | 11.17% | ||
| Debt3 | 14,809) | 14,809) | ÷ | 71,478) | = | 0.21 | 0.21 | × | 2.53% × (1 – 21.00%) | = | 0.41% | ||
| Operating lease liability4 | 814) | 814) | ÷ | 71,478) | = | 0.01 | 0.01 | × | 3.10% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 71,478) | 1.00 | 11.61% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
SLB N.V., economic spread ratio calculation
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,056 ÷ 44,371 = -4.63%
The financial trajectory from 2021 to 2025 is characterized by a period of recovery in economic value creation followed by a significant contraction in the final year. While the organization moved toward a break-even state in terms of economic profit by 2024, a substantial reversal occurred in 2025, coinciding with a continued expansion of the capital base.
- Economic Profit Trends
- A consistent recovery phase is observed between 2021 and 2024, where economic profit improved from negative 1,523 million USD to nearly break-even at negative 1 million USD. However, this positive momentum was abruptly reversed in 2025, with economic profit falling to negative 2,056 million USD, representing the lowest point in the analyzed period.
- Invested Capital Growth
- Invested capital exhibited a steady and uninterrupted upward trend over the five-year period. The capital base grew from 32,896 million USD in 2021 to 44,371 million USD by 2025. This indicates a continuous increase in the resources deployed to generate returns, regardless of the fluctuations in economic profit.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrored the movement of economic profit, narrowing from negative 4.63% in 2021 to 0.00% in 2024, suggesting that the return on invested capital converged with the cost of capital. In 2025, the ratio returned to negative 4.63%. The fact that the spread ratio returned to its 2021 level despite a significantly larger capital base in 2025 highlights a sharp decline in the efficiency of capital utilization during the final year.
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Economic Profit Margin
SLB N.V., economic profit margin calculation
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -2,056 ÷ 35,708 = -5.76%
The financial performance from 2021 to 2025 is characterized by a period of steady recovery followed by a sharp reversal in economic value creation. Between 2021 and 2024, there was a consistent trend toward narrowing the economic profit deficit, coinciding with robust top-line growth. However, the results for 2025 indicate a significant downturn, where economic profit declined to its lowest level in the reported period despite revenue remaining relatively stable.
- Revenue Trends
- Revenue experienced consistent growth over the first four years, rising from US$ 22,929 million in 2021 to a peak of US$ 36,289 million in 2024. A slight contraction was observed in 2025, with revenue decreasing to US$ 35,708 million, suggesting a stabilization or slight decline in market expansion.
- Economic Profit Trajectory
- A strong recovery path was evident from 2021 through 2024, as economic profit improved from -US$ 1,523 million to nearly break-even at -US$ 1 million. This indicates a period where the company successfully reduced the gap between its net operating profit and the cost of its capital. This progress was abruptly reversed in 2025, with economic profit dropping to -US$ 2,056 million, representing a substantial erosion of economic value.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the absolute profit trend, improving significantly from -6.64% in 2021 to 0.00% in 2024. The achievement of a 0.00% margin in 2024 indicates that the company had reached a point where its returns exactly offset the cost of capital. The subsequent shift to -5.76% in 2025 reflects a rapid decline in efficiency or an increase in the capital charge, returning the margin to levels comparable to the 2021 baseline.
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