Yahoo Finance Why Schlumberger’s 1Q16 Earnings Beat Estimates
After Schlumberger's Lower Earnings, What's on the Horizon?
Schlumberger’s fiscal 1Q16 revenues
Schlumberger (SLB) released its fiscal 1Q16 results yesterday. The company recorded total revenues of $6.5 billion in fiscal 1Q16, down 36% from the ~$10.3 billion recorded in fiscal 1Q15. Schlumberger’s revenues for the latest quarter fell mostly due to a slowdown in North American drilling operations, pressure on SLB’s products and service prices, and project delays and job cancellations.
Compared to fiscal 4Q15, Schlumberger’s revenues fell 16%. In comparison, fiscal 4Q15 revenue for Forum Energy Technologies (FET), SLB’s smaller market cap peer, fell 55% year-over-year.
Schlumberger’s 1Q16 earnings
Fiscal 1Q16 adjusted net earnings per share (or EPS) for Schlumberger were $0.40. This exceeded consensus sell-side analysts’ EPS estimate by 3.6%. Despite weak performance in North America, steady performance in Kuwait, Egypt, and the United Arab Emirates, as well as gains from new technology deployments, helped SLB’s earnings beat analysts’ estimates.
Compared to fiscal 1Q15, SLB’s adjusted earnings deteriorated 62% until fiscal 1Q16. On average, adjusted EPS have exceeded consensus EPS by ~4% in the past 13 quarters. Schlumberger is 22.3% of the Market Vectors Oil Services ETF (OIH), an ETF tracking an index of 25 oilfield service companies.
What affected Schlumberger’s reported earnings in fiscal 1Q16?
In fiscal 1Q16, SLB’s reported net income was ~$501 million. This is ~49% lower than fiscal 1Q15, when SLB reported $975 million in net income. Year-over-year, SLB’s income fell mostly on account of a lower rig count and lower exploration and drilling spending by upstream companies in various regions, particularly in North America. Compared to fiscal 4Q15, when Schlumberger recorded a net loss as a result of huge impairment charges, the fiscal 1Q16 reported net income improved.
Next, we’ll discuss SLB’s growth drivers.
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