SLB (NYSE: $SLB), formerly known as Schlumberger Limited, is a global technology company that provides solutions for the energy industry across more than 100 countries. It is recognized for its proficiency in reservoir analysis, well-building, production optimization, and digital solutions.Â
The company aims to decarbonize fossil fuels while developing comprehensive energy systems. Today, SLB reported impressive fourth quarter and full year 2023 results driven by strong international activity and margin expansion. The oilfield services giant grew revenue by double digits for the 10th straight quarter, led by its international business.
Higher commodity prices also fueled increased consumer spending worldwide. Boosted by rising profits, SLB generated robust cash flow, enabling further deleveraging. The company announced a 10% dividend increase, reflecting confidence in the outlook.
SLB’s Robust Q4 Performance: 14% Revenue Surge
Fourth quarter revenue climbed 14% year-over-year to $8.99 billion. International revenue grew 18% to $7.29 billion, while North American revenue was flat at $1.64 billion. By division, reservoir performance grew 12%, well construction increased 6%, and production systems surged 33% from a year ago.
Digital integration revenue rose 4%, driven by further adoption of Delfi technology and higher exploration data sales, despite weakness in Asset Performance Solutions (APS). For 2023, SLB grew revenue by 18% to $33.14 billion from 2021’s $28.09 billion. Robust international growth of 20% fueled the solid top-line increase, led by 26% higher revenue from the Middle East and Asia.
Additional production systems scaled from the Aker Solutions, with the division rising 25% for the year. Core divisions (reservoir, drilling & evaluation, and production systems) climbed 20% to almost $30 billion.
Hefty volume growth combined with further pricing gains and manufacturing efficiencies propelled earnings higher. The full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) expanded 25% to $8.11 billion, while the EBITDA margin hit 24.5%, up 147 basis points. Return on capital employed also reached the highest level since 2014, reflecting the company’s capital discipline and focus on maximizing cash returns.
SBL’s CEO Olivier Le Peuch added, “We have concluded a remarkable year marked by widespread revenue growth, margin expansion, and exceptional free cash flow… These results showcase our continued ability to deliver superior earnings, generate impressive cash flows, and maintain a strong balance sheet.”
SLB’s Stock Performance Reflects Financial Success
SLB beat earnings and revenue estimates for the fourth quarter. The company’s international revenue jumped 18% during the period. SLB also raised its quarterly dividend by 10% to 27.5 cents per share. For the full year, SLB’s revenue increased 18%, and adjusted earnings surged 37% year-over-year.
The strong full-year performance was fueled by substantial international growth, with around 90% of SLB’s international GeoUnits posting year-over-year increases. This international growth was complemented by sustained performance in North America. SLB’s CEO attributed the company’s strong performance to these factors.
Currently, the shares rose 2.58% to $49.81 in trading as of January 20, 2024, after the earnings release, which showed SLB beating estimates and raising its dividend. The company posted fourth-quarter adjusted EPS of 86 cents, surpassing the 84 cents expected. Revenue of $8.99 billion also exceeded the $8.96 billion analysts predicted.
With oil prices holding up reasonably well and activity levels projected to increase further, especially internationally, SLB is poised for another year of solid growth and profitability. Its leading position in key technologies and focus on higher-margin businesses should continue to support margin improvement.
SLB’s 2023 Financial Success
SLB’s outstanding performance in 2023 demonstrates the company’s ability to leverage its technological leadership and global footprint to drive growth.
The impressive financial results stem from several factors, including deploying innovative technologies, expanding into new markets like the Aker subsea business, increasing global demand for SLB’s services, and a rigorous focus on cost management.
These factors enabled SLB to surpass quarterly expectations. The company adapts and thrives amid fluctuating economic conditions. Given current uncertainties, this performance highlights SLB’s resilience and undisputed market leadership.
International Markets Drive SLB’s 2024 Growth Outlook
In 2024, SLB is optimistic about another year of strong growth driven by international markets. Favorable market trends, growth opportunities in Production Systems, and the OneSubsea joint venture enhancing subsea prospects point to further expansion.
Sustained momentum is expected in Reservoir Performance and increased activity in Well Construction. The adoption of SLB’s Digital solutions, especially new technology platforms, will likely rise.
Given confidence in the cycle’s strength and cash flow visibility, SLB’s Board approved a 10% dividend increase. SLB also plans to boost share repurchases in 2024, visibly enhancing shareholder returns. With a clear strategy, a uniquely positioned portfolio, and a strong team, SLB is poised to deliver value for customers and shareholders in the years ahead.
Final Thoughts
SLB’s international revenue growth, strategic investments, and shareholder-friendly moves to position the firm for long-term prosperity. The dividend hike and expanded share buybacks showcase the company’s dedication to providing value for customers and investors, cementing its base for ongoing outperformance in energy.
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