Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Schlumberger Ltd., profitability ratios
Based on: 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), 10-K (reporting date: 2020-12-31).
The financial data reveals a clear improvement in profitability and efficiency over the five-year period. Starting from 2020, the company's margins and returns were significantly negative or low, but there has been a steady and positive trend across all major indicators through to 2024.
- Gross Profit Margin
- This margin remains positive throughout the period and shows consistent growth, rising from 11.02% in 2020 to 20.56% in 2024. The upward trajectory indicates an increasingly efficient production or service delivery process, leading to higher profitability before operating expenses.
- Operating Profit Margin
- The operating profit margin experienced a dramatic turnaround from a large negative figure of -46.62% in 2020 to positive territory at 12.06% in 2021, subsequently increasing to 16.43% in 2023 before slightly dipping to 15.99% in 2024. This suggests enhanced control over operating costs and improved operational efficiency over time.
- Net Profit Margin
- Net profit margin follows a similar pattern to operating margin but remains slightly lower in percentage terms. It improved from a negative -44.57% in 2020 to 12.29% by 2024, reflecting the impact of factors beyond operations, such as interest, taxes, or extraordinary items, which nonetheless have diminished significantly.
- Return on Equity (ROE)
- ROE exhibited a considerable recovery from -87.13% in 2020 to 21.11% in 2024. This indicates a significant turnaround in the company’s ability to generate net income relative to shareholders' equity, reflecting improved profitability and more effective capital utilization.
- Return on Assets (ROA)
- ROA displayed consistent improvement from -24.79% in 2020 to 9.12% in 2024. This progression shows enhanced asset efficiency, suggesting the company's assets have become more productive in generating earnings during the examined timeframe.
Overall, the data portrays a company that has successfully transitioned from a period of substantial losses to achieving stable profitability and operational efficiency. The marked improvements in margins and returns illustrate strengthened financial health and better management of resources, signaling a positive outlook for future performance if these trends continue.
Return on Sales
Return on Investment
Gross Profit Margin
Schlumberger Ltd., gross profit margin calculation
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Gross profit margin = 100 × Gross margin ÷ Revenue
= 100 × 7,460 ÷ 36,289 = 20.56%
- Revenue
- The revenue shows a generally increasing trend over the observed periods. Starting at 23,601 million US dollars in 2020, it declined slightly to 22,929 million US dollars in 2021. However, from 2021 onwards, there is a marked upward trajectory, reaching 28,091 million US dollars in 2022, 33,135 million US dollars in 2023, and 36,289 million US dollars in 2024. This indicates recovery and growth after the initial dip.
- Gross margin
- The gross margin exhibits consistent growth throughout the period. It starts at 2,601 million US dollars in 2020 and increases steadily each year to 3,658 million in 2021, 5,161 million in 2022, 6,563 million in 2023, and finally 7,460 million in 2024. This pattern suggests improving profitability at the gross profit level.
- Gross profit margin
- The gross profit margin percentage demonstrates a significant upward trend, moving from 11.02% in 2020 to 15.95% in 2021, then increasing further to 18.37% in 2022, 19.81% in 2023, and reaching 20.56% in 2024. This improvement signals enhanced efficiency or better cost management relative to revenue over the years.
- Overall assessment
- The financial data collectively reveals a positive progression in key performance metrics. Despite a slight revenue decline in 2021, the company achieved higher gross margins and improved gross profit margin percentages each subsequent year. The increase in gross profit margin implies strengthening operational performance and pricing power. The sustained growth in both revenue and gross margin underscores the company's ability to expand its business while improving profitability at the gross level.
Operating Profit Margin
Schlumberger Ltd., operating profit margin calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Revenue
= 100 × 5,804 ÷ 36,289 = 15.99%
The financial data indicates significant fluctuations in Schlumberger Ltd.'s operating income and revenue over the examined periods. The operating income showed a substantial loss in the year ending December 31, 2020, with a value of -11,002 million US dollars. This was followed by a notable recovery in subsequent years, turning positive with 2,765 million US dollars in 2021, and continuing to rise consistently through 2022, 2023, and 2024, reaching 5,804 million US dollars.
Revenue trends demonstrate some variability but generally depict a positive growth trajectory. Starting from 23,601 million US dollars in 2020, revenue slightly decreased to 22,929 million US dollars in 2021. However, from 2021 onwards, the revenue increased steadily each year, achieving 28,091 million US dollars in 2022, then rising to 33,135 million US dollars in 2023, and further expanding to 36,289 million US dollars in 2024.
The operating profit margin reflects a dramatic improvement from a negative margin of -46.62% in 2020 to a positive and increasing margin of 12.06% in 2021. The margin continued to improve over the following years, reaching 14.78% in 2022 and peaking at 16.43% in 2023 before a slight decrease to 15.99% in 2024. This pattern suggests enhanced operational efficiency and profitability over the period, despite a minor dip in the latest year.
- Summary of Trends:
- - The company experienced a severe operating loss in 2020, followed by a robust recovery and growth in operating income over the next four years.
- - Revenue showed initial decline in 2021 but consistently increased thereafter, indicating sustained market or business expansion.
- - Operating profit margins improved substantially post-2020, highlighting better cost management or pricing power, though a slight decrease in the last year suggests potential emerging pressures on profitability.
Net Profit Margin
Schlumberger Ltd., net profit margin calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net profit margin = 100 × Net income (loss) attributable to SLB ÷ Revenue
= 100 × 4,461 ÷ 36,289 = 12.29%
The financial data over the five-year period reflects a significant recovery and growth in the company's performance.
- Net Income (Loss) Attributable to SLB
- The net income experienced a substantial improvement, beginning with a significant loss of approximately -$10.5 billion in 2020. From 2021 onwards, the company shifted to positive net income values, which steadily increased each year, reaching around $4.5 billion by 2024. This marks a turnaround from a negative to a consistently profitable position.
- Revenue
- Revenue showed a general upward trend during the period. Although there was a slight decline from $23.6 billion in 2020 to about $22.9 billion in 2021, revenue rebounded strongly in subsequent years. By 2024, revenue had grown to approximately $36.3 billion, indicating robust business expansion and top-line growth.
- Net Profit Margin
- The net profit margin mirrored the trajectory seen in net income. The margin was deeply negative in 2020, at around -44.6%, reflecting the heavy loss incurred that year. However, from 2021 forward, the margin turned positive and exhibited a modest but steady increase, stabilizing around 12% by 2023 and 2024. This suggests improved operational efficiency and profitability relative to revenue.
Overall, the data indicates a recovery from a challenging financial position in 2020 to a period of profitability and sustained growth by 2024. Both top-line revenue growth and profitability margins demonstrate positive trends, underscoring successful financial and operational management over the period analyzed.
Return on Equity (ROE)
Schlumberger Ltd., ROE calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROE = 100 × Net income (loss) attributable to SLB ÷ Total SLB stockholders’ equity
= 100 × 4,461 ÷ 21,130 = 21.11%
- Net income (loss) attributable to SLB
- The reported net income demonstrates a significant turnaround over the period under review. Starting with a substantial loss of $10,518 million in 2020, profitability improved markedly, reaching positive territory at $1,881 million in 2021. This upward trend continued consistently, with net income rising to $3,441 million in 2022, $4,203 million in 2023, and further to $4,461 million in 2024. The data indicates a strong recovery and growth in earnings after the initial loss, reflecting enhanced operational performance or favorable market conditions.
- Total SLB stockholders’ equity
- Stockholders’ equity shows a steady and continuous increase throughout the period. Beginning at $12,071 million in 2020, equity expanded to $15,004 million in 2021, $17,685 million in 2022, $20,189 million in 2023, and reached $21,130 million in 2024. This upward movement suggests consistent retention of earnings, possible capital injections, or asset appreciation, contributing to a stronger financial foundation and increased shareholder value.
- Return on Equity (ROE)
- Return on equity exhibits a significant improvement from a negative return of -87.13% in 2020 to positive and increasing rates in subsequent years. ROE rose to 12.54% in 2021, then to 19.46% in 2022, followed by 20.82% in 2023, and slightly increased to 21.11% in 2024. This trend indicates improving profitability relative to the equity base, reinforcing the positive turnaround evidenced by the net income figures and reflecting efficient capital utilization and growing shareholder returns.
Return on Assets (ROA)
Schlumberger Ltd., ROA calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
ROA = 100 × Net income (loss) attributable to SLB ÷ Total assets
= 100 × 4,461 ÷ 48,935 = 9.12%
The financial data reveals notable improvements and trends over the five-year period from 2020 to 2024. The net income attributable to the company exhibits a substantial recovery after a significant loss in 2020. Specifically, the net loss of approximately $10.5 billion in 2020 shifts to a positive net income of $1.88 billion in 2021, and continues to increase steadily through 2024, reaching about $4.46 billion. This indicates enhanced profitability and operational recovery over the period.
Total assets show a moderate fluctuation but maintain an overall increasing trend. The asset base starts at approximately $42.4 billion in 2020, slightly decreases in 2021, then increases consistently year by year, reaching almost $48.9 billion by the end of 2024. This suggests stable asset growth and possible strategic investments or asset acquisitions during the latter years.
Return on assets (ROA) follows a parallel improvement trajectory corresponding with the net income recovery. The ROA is deeply negative at -24.79% in 2020, reflecting the significant net loss relative to assets. It improves sharply to 4.53% in 2021 and sees continuous growth annually, reaching 9.12% in 2024. This progression highlights improved efficiency in asset utilization to generate profits.
- Key Observations:
- The transition from a substantial net loss to sustained profitability over the five years demonstrates effective operational turnaround and financial stabilization.
- The increasing total assets base after 2021 implies ongoing investment or asset management strategies supporting growth.
- The improving ROA underscores enhanced profitability relative to asset levels, confirming better asset utilization and operational efficiency.