Adds details from call.
Oilfield services contractor SLB said it is taking proactive steps to offset the impact of US tariffs by reviewing its supply chain and manufacturing network, pursuing exemptions and talking to customers to recover related cost increases.
"We have made progress on all these fronts in the last two weeks, and we are stepping up those actions across the organization as we speak," chief financial officer Stephane Biguet told analysts after the company reported first quarter results today.
SLB is partly protected from the overall tariff fallout given 80pc of total revenue comes from international markets, as well as its in-country manufacturing and local sourcing efforts. But other areas are exposed to increasing tariffs, such as imports of raw materials into the US, as well as exports from the US subject to retaliatory action.
Under the current tariff framework, most of the likely effects come from trade activity between the US and China.
"As the second quarter progresses and ongoing trade negotiations continue, we will hopefully gain better visibility of where tariffs may settle and the extent to which we will be able to mitigate their effects on our business," Biguet said.
In the current climate, SLB says customers are likely to take a more cautious approach to near-term activity.
Given industry headwinds from volatile oil prices and demand risks, SLB expects global upstream investment to decline this year from 2024, with customer spending in the Middle East and Asia holding up better than elsewhere.
SLB reported a "subdued" start to the year as revenue fell 3pc in the first quarter from the same three months of 2024.
The company noted higher activity in parts of the Middle East, North Africa, Argentina and offshore US, along with strong growth in its data center and digital businesses in North America. However, those gains were more than offset by a larger-than-expected slowdown in Mexico, a slow start in Saudi Arabia and offshore Africa, and a steep decline in Russia.
Even so, SLB remains committed to returning a minimum of $4bn to shareholders through dividends and share buybacks this year.
"The industry may experience a potential shift of priorities driven by changes in the global economy, fluctuating commodity prices and evolving tariffs — all of which could impact upstream oil and gas investment and, in turn, affect demand for our products and services, said chief executive officer Olivier Le Peuch. "In this uncertain environment, we remain committed to protecting our margins, generating strong cash flow and delivering consistent value."
First quarter profit of $797mn was down from $1.07bn in the same three months of 2024. Revenue of $8.5bn compared with $8.7bn last year.
SLB is the last of the top oilfield services firms to post first-quarter results. Halliburton and Baker Hughes reported earlier this week.
