SBM shares fall amid mixed first quarter results

Investing.com -- SBM Offshore shares dropped by 2.5% following the company’s first quarter trading statement, which presented a mixed financial picture.

The company reported a 27% increase in first quarter revenue to $1,103 million, yet this was accompanied by a 14% decline in the Lease & Operate segment, which brought in $476 million. In contrast, the Turnkey segment saw a significant boost, surging 98% to $627 million.

Despite the overall revenue growth, the market’s reaction suggests concerns over the weaker performance in the Lease & Operate division, a key area of SBM’s business. The company did, however, maintain its full-year 2025 revenue guidance of over $4.9 billion, with expectations of more than $2.2 billion from Lease & Operate and approximately $2.7 billion from Turnkey.

The financial stability of SBM Offshore appears to remain intact, with the revenue backlog, cash backlog, and net debt holding steady at $35.1 billion, $9.5 billion, and $5.7 billion, respectively. This suggests that, while the first quarter results were mixed, the company’s long-term financial health isn’t immediately threatened.

Looking ahead, 2025 is poised to be a pivotal year for SBM, with three large Floating Production Storage and Offloading (FPSOs) units expected to join the fleet. The FPSO Almirante Tamandaré has already achieved first oil as of February 2025, and the FPSO Alexandre de Gusmão is on track for mid-year. Meanwhile, the FPSO ONE GUYANA has safely arrived in Guyana, indicating potential for a stronger second half of the year, particularly in the fourth quarter.

The company has also reaffirmed its cash returns guidance, following the recent €0.86 dividend paid out in May 2025. SBM Offshore has initiated a €141 million share buyback program, with 6.75% already completed at the time of writing.

The company’s conservative estimate suggests that a minimum of $1.7 billion will be returned to shareholders by 2030, which is less than $300 million per annum over the period from 2025 to 2030. However, with the cumulative Free Cash Flow to Equity (FCFE) from 2025 to 2030 expected to be closer to approximately $2.6 billion, the guidance may indeed be conservative.

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