Schlumberger Profit Falls as Revenue Slumps
April 21 2016 - 5:40PM
Dow Jones News
Schlumberger Ltd. said its first-quarter earnings fell 49% and
revenue tumbled as reduced spending by energy producers continued
to hurt demand.
Oil producers have slashed their capital spending plans and
halted drilling as they struggle with weak commodities prices,
which in turn has pressured oil-services companies to reduce their
costs.
In the latest quarter, "the decline in global activity and the
rate of activity disruption reached unprecedented levels as the
industry displayed clear signs of operating in a full-scale cash
crisis," Chairman and Chief Executive Paal Kibsgaard said in
prepared remarks Thursday.
"This environment is expected to continue deteriorating over the
coming quarter given the magnitude and erratic nature of the
disruptions in activity," he said, adding that "our overall outlook
for the oil markets remains unchanged."
Schlumberger is the first major oil-field services company to
report its first-quarter results. Halliburton Co. and Baker Hughes
Inc., competitors that have a pending merger deal, are set to
report on Monday and Wednesday, respectively.
The sharp decline in oil prices also has been a catalyst for
energy deals, including Halliburton's planned acquisition of Baker
Hughes. U.S. antitrust regulators recently filed suit to block that
deal, alleging the planned combination would hurt competition in
the sector.
A day after the latest quarter closed, Schlumberger completed
its acquisition of Cameron International Corp., which makes
drilling equipment and supplies maintenance equipment to
pipelines.
Revenue in Schlumberger's North America business slumped 55%.
The segment swung to a pretax operating loss of $10 million,
compared with a year earlier profit of $416 million.
For Schlumberger's operations outside North America, revenue
dropped 28%. Pretax operating earnings declined to $1.06 billion
from $1.66 billion.
Over all, Schlumberger reported a profit of $501 million, or 40
cents a share, down from $975 million, or 76 cents a share, a year
earlier. Revenue decreased 36% to $6.52 billion.
Analysts polled by Thomson Reuters expected per-share profit of
39 cents and revenue of $6.51 billion.
Mr. Kibsgaard said Schlumberger would continue to "tailor costs
and resources to activity, while remaining cautious in adding back
capacity given the unpredictable nature of the current market."
Schlumberger in January said it had reduced its workforce by an
additional 10,000 employees on expectations demand would remain
weak for the first half of this year.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
April 21, 2016 17:25 ET (21:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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