SFL Corporation (NYSE:SFL) saw its stock decline 12% following a reduction in its quarterly dividend, lowered to $0.20 per share from the previous $0.27. The company cited challenges in the drilling rig market and tighter near-term cash flow as the reason for the cut.
The shipping and energy firm reported second-quarter earnings of $0.01 per share, surpassing analysts’ expectations of a $0.05 loss. Revenue reached $192.58 million, slightly above the consensus estimate of $192.4 million. Despite the modest revenue beat, investor attention centered on the dividend reduction, attributed to market uncertainty and oil price volatility affecting SFL’s Hercules drilling rig.
During the quarter, SFL secured $194 million in charter hire, with roughly 87% coming from shipping operations and 13% from energy. Adjusted EBITDA from consolidated subsidiaries totaled $104 million, comprising $97 million from shipping and $7 million from energy activities, alongside an additional $8 million from associated vessel-owning companies.
CEO Ole B. Hjertaker highlighted recent fleet renewal initiatives, including the sale of older vessels for over $200 million and a five-year charter extension for three container vessels with Maersk, adding approximately $225 million to the company’s backlog.
“The market for our legacy drilling rig Hercules remains challenging, with the recent market uncertainty and oil price volatility delaying new employment opportunities for the rig,” Hjertaker said in the earnings release. “This is impacting our near-term financial results as we keep the rig warm stacked.”
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