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Introduction & Market Context
Elkem ASA (OL:ELK) reported its first quarter 2025 results on April 30, highlighting the company’s resilience amid challenging global market conditions. The Norwegian silicon-based materials producer achieved an EBITDA of NOK 898 million with an 11% margin, as markets continue to be characterized by uncertainty and trade tensions.
CEO Helge Aasen emphasized the company’s strategic positioning: "While global trade tensions are creating uncertainty, we are confident that Elkem is strategically well positioned to handle the market volatility due to our diversified geographic footprint and independent value chains."
The global economic environment remains challenging, with OECD revisions pointing to slower growth across major economies. As shown in the following chart, global GDP growth is projected to gradually decline from 3.2% in 2024 to 3.0% in 2026, with similar trends in G20 countries:
Quarterly Performance Highlights
Elkem reported total operating income of NOK 8,016 million for Q1 2025, with an EBITDA of NOK 898 million representing an 11% margin. The company’s performance varied significantly across its three main divisions, with Silicones showing marked improvement while Silicon Products faced headwinds.
As illustrated in the following financial overview, the company’s revenue and EBITDA showed slight improvement compared to the previous quarter:
The divisional performance revealed contrasting results. The Silicon Products division was significantly impacted by maintenance stops and weak markets, with total operating income of MNOK 3,530 (down 12%) and EBITDA of MNOK 489 (down 28%). Sales volume decreased by 10% compared to the previous year:
In contrast, the Carbon Solutions division delivered good performance despite challenging markets, with total operating income of MNOK 860 (up 3%) and EBITDA of MNOK 261 (up 5%):
The Silicones division showed the most significant improvement, with total operating income of MNOK 3,873 (up 16%) and a positive EBITDA contribution:
Financial Position
Elkem maintained a strong equity position at BNOK 24.9 as of March 31, 2025, representing an equity-to-total-assets ratio of 50%. However, earnings per share were negatively affected by operations under strategic review, resulting in an EPS of NOK -0.33 for the quarter.
The company’s debt maturity profile remains well-structured, with a net interest-bearing debt of BNOK 11.0 and a leverage ratio of 2.5x:
Cash flow from operations was MNOK 97 for the quarter, while strategic investments amounted to MNOK 52, reflecting the company’s focus on cash generation in uncertain market conditions.
Strategic Initiatives
Elkem continues to emphasize its commitment to environmental, social, and governance (ESG) performance. The company has received top ratings from EcoVadis (Platinum) and CDP (A ratings for Forest and Water), placing it in the 98th percentile according to S&P Global CSA.
The following slide highlights Elkem’s sustainability targets, including a 25% reduction in CO2 emissions by 2030, a 32% reduction in CO2 product footprint by 2030, and net zero CO2 emissions by 2050:
The company’s long-term business strategy focuses on creating value through profitable and sustainable growth, with targets including more than 5% annual growth and maintaining an EBITDA margin above 15%:
A key element of Elkem’s strategy is its commitment to reducing CO2 emissions throughout the value chain, as illustrated in this comprehensive overview of their climate initiatives:
Market Outlook
Elkem’s presentation highlighted several market trends affecting its business segments. The automotive industry, a key end market for the company, shows mixed signals with revised forecasts. While China’s light vehicle production remains stable, Europe faces challenges related to electrification and stagnant demand.
The company also noted increased spending on infrastructure and defense driving metals demand, particularly with Germany establishing a BEUR 500 infrastructure fund and NATO/EU’s ReArmEU initiative. These developments are expected to benefit silicon and ferrosilicon demand, as these materials are used in infrastructure projects and defense applications.
Forward-Looking Statements
For the second quarter of 2025, Elkem anticipates continued uncertainty due to global trade tensions. The company expects trade tensions to likely impact Silicones markets, while demand for Silicon Products is projected to remain low. Carbon Solutions is anticipated to benefit from its specialty product portfolio.
As summarized in the key take-aways slide, Elkem is focusing on cash generation while navigating through uncertain markets:
Elkem’s long-term investment case remains centered on its position as a global leader in advanced silicon-based materials, with leading cost positions and a geographically diverse business model:
In conclusion, while Elkem faces significant market headwinds and uncertainty due to global trade tensions, the company’s diversified geographic footprint and independent value chains provide resilience. The improved performance in the Silicones division offers a bright spot amid challenging conditions for Silicon Products, and the company continues to advance its sustainability initiatives while maintaining a strong financial position.
Full presentation:
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