SFL Corporation Ltd has reported a sharp decline in earnings for the second quarter of 2025, with net income falling to $1.5 million, or one cent per share, compared with $20.6 million, or 16 cents per share, a year earlier.

The Bermudian-based shipowner said the drop reflected vessel sales and the impact of its idle harsh-environment rig Hercules, which continues to weigh on near-term cashflow.

Ole Hjertaker, the chief executive, said the company had nonetheless made important progress strengthening its long-term position.

“We have taken decisive steps in recent quarters to strengthen our charter backlog by securing agreements with strong counterparties and deploying high-quality assets,” he said. “This includes investments in cargo-handling and fuel-efficiency upgrades across our existing fleet, while divesting of older, less efficient vessels.”

He noted that the changes were already paying off.

“As a result, our fleet’s operational and fuel consumption efficiency has improved materially, delivering benefits to both SFL and our customers,” he said. But Hercules remains a drag on performance.

“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,” Mr Hjertaker said. “This is impacting our near-term financial results as we keep the rig warm stacked.”

The company has also sold and redelivered several vessels under pre-agreed purchase options. Mr Hjertaker said this freed up capital for reinvestment, but at the cost of short-term revenue.

“While this is increasing our available capital for new investments significantly, it is also reducing the near-term cashflow generation.”

Reflecting those pressures, the board trimmed the dividend to 20 cents per share, down from 27 cents last year. Even so, SFL marked its 86th consecutive quarterly payout, totalling $2.9 billion distributed to shareholders since inception in 2004.