SLB N.V. (NYSE:SLB)

The financial performance, as indicated by the two-component DuPont analysis, demonstrates a generally positive trend in profitability and efficiency over the observed period, followed by a more recent deceleration. Return on Assets (ROA) and Financial Leverage both contribute to the overall Return on Equity (ROE), and their interplay reveals key insights into the company’s performance.

Return on Assets (ROA)

ROA exhibited a consistent upward trajectory from March 31, 2022 (4.98%) to December 31, 2023 (8.76%). This indicates improving efficiency in utilizing assets to generate earnings. However, the rate of increase slowed in subsequent periods, with ROA peaking at 9.12% in December 2024 before declining to 6.15% by December 2025. This recent decrease suggests a potential weakening in asset utilization efficiency.

Financial Leverage

Financial Leverage, representing the extent to which the company uses debt financing, generally decreased over the analyzed timeframe. Starting at 2.73 in March 2022, it steadily declined to 2.10 by December 2025. This suggests a reduction in the company’s reliance on debt. A notable increase is observed in March 2025 (2.51) before resuming the downward trend, potentially indicating a temporary strategic decision to increase borrowing.

Return on Equity (ROE)

ROE mirrored the initial positive trend of ROA, increasing from 13.63% in March 2022 to a peak of 21.47% in March 2025. This growth was driven by both improving asset efficiency and, initially, sustained financial leverage. However, the decline in ROA, coupled with the decreasing financial leverage, resulted in a substantial decrease in ROE to 12.92% by December 2025. This indicates that the company’s ability to generate returns for shareholders has diminished in the most recent period.

The interplay between ROA and Financial Leverage demonstrates that the initial gains in ROE were attributable to both improved asset management and the strategic use of debt. The recent decline in ROE, however, is primarily driven by the weakening ROA, with the reduction in financial leverage exacerbating the effect. The company’s performance suggests a shift from a period of strong profitability and efficient asset utilization to a phase where maintaining profitability is becoming more challenging.

The analysis of the provided financial metrics reveals a dynamic relationship between profitability, asset utilization, and financial leverage in determining overall return on equity. A general upward trend in ROE is observable from March 2022 through December 2025, though with some fluctuations and a noticeable deceleration in the later periods.

Net Profit Margin

The Net Profit Margin demonstrates a consistent increase from 8.84% in March 2022 to a peak of 12.97% in September 2023. Subsequent quarters show a slight decline, reaching 9.45% by December 2025. This suggests improving profitability initially, followed by a gradual erosion, potentially due to increased costs or competitive pressures. The margin remains relatively strong throughout the period, however.

Asset Turnover

Asset Turnover exhibits a steady improvement from 0.56 in March 2022 to 0.74 in December 2024. This indicates increasing efficiency in utilizing assets to generate revenue. A subsequent decrease is observed, falling to 0.65 by December 2025. This could be attributed to a buildup of assets, slower sales, or a combination of both. The overall trend suggests effective asset management for much of the analyzed period.

Financial Leverage

Financial Leverage generally decreases from 2.73 in March 2022 to 2.10 in December 2025. This indicates a reduction in the proportion of assets financed by debt. A slight increase is noted in the period from December 2024 to March 2025, before resuming the downward trend. The decreasing leverage suggests a more conservative capital structure over time.

Return on Equity (ROE)

ROE increased significantly from 13.63% in March 2022 to 21.47% in March 2025, driven by improvements in all three components of the DuPont analysis. However, the rate of increase slowed considerably in the latter half of the period, with ROE declining to 12.92% by December 2025. This deceleration aligns with the observed declines in both Net Profit Margin and Asset Turnover, despite the continued reduction in Financial Leverage. The initial strong ROE growth was subsequently tempered by weakening operational performance.

The interplay between these ratios suggests that initial gains in ROE were primarily fueled by improved profitability and asset utilization. The reduction in financial leverage further amplified these gains. However, the recent decline in ROE indicates that maintaining profitability and efficient asset management will be crucial for sustaining shareholder returns.

The five-component DuPont analysis reveals a dynamic performance pattern over the observed period. Initially, Return on Equity (ROE) demonstrated a consistent upward trajectory from March 2022 to December 2022, peaking at 19.46%. This positive trend continued into the first half of 2023, albeit with a slight deceleration. Subsequently, ROE experienced a noticeable decline in the latter half of 2023 and into 2024, before stabilizing and then decreasing again through the end of the observation period.

Tax Burden

The tax burden remained relatively stable throughout the period, fluctuating within a narrow range between 0.80 and 0.83. A slight downward trend is observed from March 2022 to December 2025, indicating a marginally increasing effective tax rate, though the changes are minimal.

Interest Burden

The interest burden exhibited a consistent increase from 0.83 in March 2022 to 0.91 in September 2023. This suggests a growing proportion of earnings allocated to interest expenses. However, from September 2023 onwards, the interest burden began to decrease, reaching 0.88 by December 2025, potentially reflecting debt reduction or refinancing efforts.

EBIT Margin

The EBIT margin showed a strong upward trend from 13.13% in March 2022 to 17.50% in March 2023, indicating improved operational profitability. While remaining high, the EBIT margin experienced a slight decline through December 2024, followed by a more pronounced decrease to 13.36% by December 2025. This suggests a weakening in core operational performance in the latter part of the period.

Asset Turnover

Asset turnover steadily increased from 0.56 in March 2022 to 0.74 in December 2024, demonstrating improved efficiency in utilizing assets to generate revenue. However, a significant decrease to 0.64 in September 2025 and 0.65 in December 2025 is observed, indicating a reduced ability to generate sales from its asset base.

Financial Leverage

Financial leverage generally decreased from 2.73 in March 2022 to 2.10 in December 2025. This suggests a reduction in the company’s reliance on debt financing. A slight increase is noted in March 2025, but the overall trend remains downward.

The initial increase in ROE was primarily driven by improvements in the EBIT margin and asset turnover, partially offset by the increasing interest burden. The subsequent decline in ROE appears to be attributable to the decreasing asset turnover and, to a lesser extent, the declining EBIT margin, despite the reduction in financial leverage and a stable tax burden. The interplay between these components highlights the sensitivity of ROE to changes in operational efficiency and profitability.

The financial performance, as indicated by the two-component disaggregation of Return on Assets (ROA), demonstrates a generally positive trend over the observed period, followed by a recent deceleration. Net Profit Margin and Asset Turnover both contribute to this dynamic, exhibiting distinct patterns. An initial period of growth is followed by stabilization and, in the most recent quarters, a slight decline.

Net Profit Margin

The Net Profit Margin experienced consistent growth from March 31, 2022 (8.84%) to December 31, 2022 (12.25%). This upward trajectory continued into the first half of 2023, peaking at 12.94% in March 2023. Subsequent quarters through December 2024 showed relative stability, fluctuating between 12.29% and 12.72%. However, a noticeable downward trend emerges in 2025, with the margin decreasing to 9.45% by December 31, 2025. This suggests increasing cost pressures or decreasing pricing power in the latter part of the period.

Asset Turnover

Asset Turnover also exhibited an increasing trend from March 31, 2022 (0.56) to December 31, 2022 (0.65). This growth continued through June 30, 2023, reaching a high of 0.70. The ratio remained relatively stable through December 31, 2024, hovering around 0.71-0.74. A decline is observed in 2025, falling to 0.64 by September 30, 2025, and remaining at 0.65 by December 31, 2025. This indicates a decreasing efficiency in utilizing assets to generate revenue.

Return on Assets (ROA)

The ROA reflects the combined effect of the Net Profit Margin and Asset Turnover. From March 31, 2022 (4.98%) to December 31, 2022 (7.98%), ROA increased substantially, driven by improvements in both components. This positive trend continued into the first half of 2023, peaking at 8.81%. ROA remained relatively stable between 8.76% and 9.12% through December 31, 2024. However, mirroring the trends in its components, ROA decreased in 2025, falling to 6.15% by December 31, 2025. The deceleration in ROA in the latter part of the period is attributable to the combined effect of declining Net Profit Margin and Asset Turnover.

In summary, the observed performance indicates a period of strong growth followed by stabilization and a recent downturn. The decline in both profitability and asset utilization in the most recent quarters warrants further investigation to understand the underlying causes and potential implications for future performance.

The financial performance, as disaggregated through a four-component DuPont analysis, reveals a generally positive trend in Return on Assets (ROA) from March 2022 through December 2024, followed by a decline into the forecast period. This overall movement is driven by interplay between profitability, efficiency, and financial leverage components. A detailed examination of each component provides further insight.

Tax Burden

The tax burden demonstrates a consistent pattern, initially holding steady around 0.82 for the first eight periods. A gradual decrease is then observed, declining to 0.80 for four consecutive periods, and finally reaching 0.79 in September 2025 before stabilizing at 0.80 in December 2025. This suggests a slight, but consistent, reduction in the proportion of pre-tax profits retained after tax payments.

Interest Burden

The interest burden exhibits an increasing trend from March 2022 to March 2023, rising from 0.83 to 0.91. Following this, the burden plateaus around 0.91 for three periods before increasing slightly to 0.92 and remaining at that level for four consecutive periods. A subsequent decline is then noted, falling to 0.91, 0.90, 0.89, and finally 0.88 by December 2025. This indicates an initial increase in the proportion of earnings required to cover interest expenses, followed by stabilization and a later reduction.

EBIT Margin

The EBIT margin shows a clear upward trajectory from 13.13% in March 2022 to 17.50% in March 2023. This growth slows in subsequent periods, with the margin fluctuating between 17.07% and 17.60% through December 2023. A moderate decline begins in March 2024, continuing through December 2025, where the margin reaches 13.36%. This suggests improving operational profitability initially, followed by a period of stabilization and then a noticeable decrease in earnings before interest and taxes as a percentage of revenue.

Asset Turnover

Asset turnover demonstrates a consistent upward trend from 0.56 in March 2022 to 0.74 in December 2024, indicating increasing efficiency in utilizing assets to generate revenue. However, this trend reverses in the forecast period, with a decline to 0.64 in September 2025 and a slight recovery to 0.65 in December 2025. This suggests a diminishing ability to generate sales from each dollar of assets.

Return on Assets (ROA)

ROA exhibits a strong positive trend, increasing from 4.98% in March 2022 to a peak of 9.12% in December 2024. This growth is then followed by a decline, falling to 6.62% in September 2025 and 6.15% in December 2025. The initial increase in ROA is attributable to improvements in both profitability (EBIT margin) and efficiency (asset turnover), partially offset by the increasing interest burden. The subsequent decline in ROA is primarily driven by the decreasing EBIT margin and asset turnover, despite the slight reduction in the interest burden and tax burden.

In summary, the analysis indicates a period of strong performance driven by increasing profitability and efficiency, followed by a weakening trend characterized by declining margins and asset utilization. The interplay of these factors suggests a potential shift in the company’s operational environment or strategic direction.

The financial performance indicators reveal distinct trends over the observed period. Generally, profitability metrics demonstrate an initial increase followed by a stabilization and then a gradual decline. The consistency in tax and interest burden ratios suggests these factors have had a relatively stable impact on net profitability throughout the period.

Tax Burden

The tax burden remained remarkably consistent, fluctuating minimally between 0.81 and 0.80. A slight downward trend is observable in the later periods, decreasing from 0.81 in March 2022 to 0.79 in September 2025, before returning to 0.80 in December 2025. This indicates a stable effective tax rate with a minor reduction towards the end of the analyzed timeframe.

Interest Burden

The interest burden exhibited a gradual increase from 0.83 in March 2022 to a peak of 0.91 between March and September 2023. Subsequently, it experienced a slight decline, reaching 0.88 in December 2025. This suggests an initial increase in the proportion of earnings allocated to interest payments, followed by a stabilization and modest reduction, potentially due to debt management or changes in interest rates.

EBIT Margin

The EBIT margin demonstrated a clear upward trend from 13.13% in March 2022 to 17.60% in September 2023. Following this peak, the margin experienced a gradual decline, ending at 13.36% in December 2025. This pattern suggests an initial improvement in operational profitability, followed by a period of erosion, potentially due to increased costs or competitive pressures.

Net Profit Margin

The net profit margin mirrored the trend of the EBIT margin, increasing from 8.84% in March 2022 to 12.97% in September 2023. A subsequent decline is observed, with the margin decreasing to 9.45% in December 2025. This indicates that the overall profitability, after accounting for all expenses including taxes and interest, initially improved but then experienced a downward trajectory. The correlation between the EBIT margin and net profit margin suggests that changes in operational profitability are a primary driver of changes in net profitability.

The observed patterns suggest a period of strong profitability growth followed by a stabilization and eventual decline. While the tax and interest burdens remained relatively stable, the erosion of both EBIT and net profit margins warrants further investigation to identify the underlying causes and potential mitigation strategies.