Schlumberger to Cut 21,000 Jobs - Adjusted Net Beats Estimate

Amid massive downturn in the energy industry, Schlumberger swings to a loss and plans 21,000 job cuts.
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Shares of Schlumberger  (SLB) - Get Report were lower after the oil-services major swung to a second-quarter net loss, posted better-than-expected adjusted profit, and said it would cut 21,000 jobs, all amid a massive downturn in the energy industry. 

The Houston company is letting go about a fifth of its 105,000 global employees as the number of oil wells drilled worldwide this year is expected to drop by almost 25%, according to Bloomberg. 

For the quarter Schlumberger reported a net loss of $2.47 a share, compared with net income of 35 cents in the year-earlier quarter. The latest adjusted figure was earnings of 5 cents a share.

The latest results reflect $3.7 billion of pretax restructuring and asset-impairment charges, including $1 billion of severance costs.

Revenue fell 35% to $5.36 billion from $8.27 billion. 

Analysts surveyed by FactSet were expecting Schlumberger to report an adjusted loss of 1 cent per share on revenue of $5.37 billion. 

"This has probably been the most challenging quarter in past decades," Chief Executive Olivier Le Peuch said in a statement.

The revenue drop reflected the "unprecedented fall in North America activity," as well as international activity. North American revenue fell 58% from a year earlier.

As demand for oil collapsed, customers cut their budgets, "accentuated by covid-19 disruptions," the executive said. The pandemic broadly dried up demand for energy.

On top of that, crude prices, while off of the lows they hit in March and April, are down about 33% for the year. 

"Looking at the macro view in the near term, oil demand is slowly starting to normalize and is expected to improve as government measures support consumption," the company said. 

"However, subsequent waves of potential covid-19 resurgence pose a negative risk to this outlook."

Longer term, the "measures we have taken to face the industry reality will continue to protect our liquidity and cash positions and allow us to expand our margins." 

At last check Schlumberger shares eased 0.7% to $19.17. In 2020 through the close of trading Thursday, the stock is off 52%.