Schlumberger climbs 6.8% despite posting a massive loss in the first quarter

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in his free… read more.
on Apr 17, 2020
Updated: Apr 28, 2020
  • Schlumberger posts £5.98 billion in revenue in Q1 and makes 20 pence of earnings per share.
  • The international oilfield services company records a net loss of £6.48 billion in the first quarter.
  • Schlumberger cuts quarterly dividend by 75% from 40 pence per share to 10 pence per share.

Schlumberger (NYSE: SLB) said on Friday that its adjusted profit in the first quarter came out stronger than the analysts’ forecast. The oil service company, however, missed revenue estimates in the recent quarter. Despite recording a huge net loss in Q1, the company was reported 6.8% higher in premarket trading on Friday. Schlumberger also resorted to cutting its quarterly dividend to preserve cash.

The Houston-headquartered company printed a net loss of £6.48 billion in the first quarter that translates to £4.26 per share. In the same quarter last year, Schlumberger had posted £408 million in net income (24 pence per share).

Schlumberger Books £6.81 Billion Impairment Charge

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Schlumberger’s results on Friday highlighted a £6.81 billion worth of a one-time impairment charge ascribed to the Coronavirus pandemic and a massive drop in global oil prices that weighed heavily on its market valuation.

According to FactSet consensus, Schlumberger was expected to make 19 pence of earnings per share in the recent quarter. On the revenue front, the consensus was at £6.03 billion. In its financial report on Friday, the international oilfield services company registered a marginally higher 20 pence of earnings per share in the first quarter but its revenue came out lower at £5.98 billion that marked a 5% decline as compared to last year’s Q1.

Schlumberger Cuts Quarterly Dividend By 75%

In its announcement on Friday, the company also declared a 75% decrease in its quarterly dividend to 10 pence per share from 40 pence per share that was originally decided. The new dividend, as per the company, is to be paid to the shareholders on July 9th.

At the price at which Schlumberger closed in the stock market on Thursday, its new annual dividend reduces the dividend yield (implied) from 14.23% to 3.56%. In comparison, the benchmark S&P 500 index currently has an implied yield of 2.12%.

At the time of writing, Schlumberger is currently exchanging hands at £12 per share in the stock market that marks an around 63% decline in 2020 so far. The SPX index, on the other hand, is down 15.9% in 2020 while an even broader 68% decline in crude oil futures has been reported so far.

Closing the regular session at £11.25 per share on Thursday, Schlumberger posted a record-low in the stock market in two decades. The oil services company currently has a market cap of £15.62 billion.

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