Caesars Entertainment misses Q2 earnings expectations, shares edge lower
Elkem ASA reported its first-quarter 2025 earnings, revealing a slight increase in operating income but facing pressures from global trade tensions and declining silicon prices. The company’s earnings per share (EPS) came in at -0.33 NOK, a reflection of ongoing challenges, while revenue forecasts were not met, impacting market sentiment. Following the announcement, Elkem’s stock price fell by 3.35% in pre-market trading, closing at 19.04, down from a previous close of 19.7. According to InvestingPro data, the company maintains a strong financial health score of "GOOD" despite these challenges, with two analysts recently revising their earnings expectations downward for the upcoming period.
Key Takeaways
- Elkem’s Q1 operating income rose by 1% year-over-year.
- The company’s EBITDA margin of 11% fell short of its long-term target.
- Trade tensions and declining silicon prices create significant uncertainty.
- Elkem’s stock price dropped by 3.35% following the earnings release.
- Strategic review of the silicones division is expected to conclude by year-end.
Company Performance
Elkem’s performance in the first quarter of 2025 was marked by a modest increase in operating income, reaching 8 billion NOK, a 1% rise from the previous year. Despite this growth, the company’s profitability was hindered by a lower-than-expected EBITDA margin of 11%, falling short of its long-term target range of 15-20%. The continuing operations managed a healthier EBITDA margin of 16%. InvestingPro analysis shows the company trading at an attractive P/E ratio of 6.15, with revenue declining 15.73% over the last twelve months.
Financial Highlights
- Operating Income: 8 billion NOK (1% increase YoY)
- Group EBITDA: 898 million NOK
- EBITDA Margin: 11%
- Earnings Per Share: -0.33 NOK
Earnings vs. Forecast
Elkem’s earnings per share of -0.33 NOK did not meet market expectations, which had anticipated a positive figure. The revenue forecast was set at 8.56 billion NOK, but actual figures were not disclosed, indicating a potential shortfall. This discrepancy contributed to the negative market reaction.
Market Reaction
Elkem’s stock price experienced a decline of 3.35% in pre-market trading following the earnings announcement, reflecting investor concerns over the company’s ability to meet financial targets amid challenging market conditions. The stock’s performance is now closer to its 52-week low of 16.5, signaling potential caution among investors.
Outlook & Guidance
Looking ahead, Elkem is focusing on cash generation and disciplined capital spending. The company anticipates opportunities from infrastructure and defense spending and is conducting a strategic review of its silicones division, expected to conclude by the end of the year. Future EPS and revenue forecasts have been set, with expectations for modest growth in the coming quarters. Based on InvestingPro data, analyst targets suggest potential upside, with price targets ranging from $1.93 to $2.89, though net income is expected to decline this year.
Executive Commentary
- "Elkem is relatively well positioned due to our diverse geographical presence," said Helge Austin, CEO, highlighting the company’s resilience amid global trade tensions.
- "Our main focus going forward will be on cash generation and disciplined capital spending," stated Morten Vega, CFO, emphasizing the company’s strategic priorities.
- "We aim to reduce and ultimately remove fossil CO2 emissions from smelting processes," added Helge Austin, underscoring Elkem’s commitment to sustainability.
Risks and Challenges
- Global trade tensions continue to create uncertainty for Elkem’s operations.
- Declining silicon prices in Europe and China could pressure margins.
- The outcome of the silicones division strategic review remains uncertain.
- Supply chain disruptions and geopolitical tensions may impact operations.
- Economic slowdown in key markets could affect demand for Elkem’s products.
Q&A
During the earnings call, analysts inquired about the progress of the silicones strategic review and its potential impact on Elkem’s future performance. Executives confirmed that the review is proceeding as planned, with minimal pre-buying observed in Q1. Additionally, questions about the impact of trade tensions were addressed, with management asserting that these factors have not significantly affected the strategic review process.
Full transcript - Elkem ASA (ELK) Q1 2025:
Oguer Lingsta, Investor Relations, Elkem: Hello, and good morning to and welcome to Elkem’s first quarter results presentation. My name is Oguer Lingsta, and I’m responsible for investor relations in Elkem. As you can see, today’s, main agenda item consists of a market update with outlook for the second quarter and the presentation of the first quarter results. CEO Helge Austin will take us through the first part, and CFO Morten Vega will present the financial results for the first quarter. After these presentations, we will open for q and a.
Helge Austin, CEO, Elkem: So with that, I leave
Oguer Lingsta, Investor Relations, Elkem: the word to CEO, Helgos.
Helge Austin, CEO, Elkem: Thank you, Olga, and good morning, everyone. As you’re all aware of, the markets are turbulent for the time being caused by global trade tensions. So this creates quite significant uncertainty. Also for us. It affects trades flows and market demand and are having an impact on LCAM’s results.
The first quarter EBITDA ended up at 898,000,000 NOK, which gave an EBITDA margin of 11%. The silicones division benefited from improved cost positions, and that’s particularly particularly the case in China. The results improved significantly compared to first quarter last year. But compared to the previous quarter, the results were hampered by Chinese New Year and also maintenance stop. The strategic review of the silicone division is underway, and the target is to conclude the process by year end.
The division is reclassified in the accounts. And if you look at the El Chem Group excluding silicones, the operating income was NOK 4,300,000,000.0 in the quarter with an EBITDA of close to 700,000,000, which represents a margin of 16%. Silicon products was also impacted by weak market conditions, including maintenance stops at several sites in Norway. In addition, we have had a power curtailment on Iceland, resulting in reduced capacity utilization at that site. Carbon solutions delivered stable results and high margins also this quarter.
So an update on ESG. Our ESG focus is built on two main pillars, reduce the c o two and other emissions and to supply the green transition with critical room critical materials. Our aim is to reduce and ultimately remove fossil c o two emissions from the smelting processes. First, through increased share of biogenic reduction materials. Longer term, we are looking at the groundbreaking r and d projects such as the carbon capture and storage project at the in Norway and the Sikalo project with the aim of completely eliminating c o two emissions and to do all this by 2050.
We are engaged in several initiatives throughout the value chain. And together with our shipping partner, NCL, we are deploying two new methanol powered container ships. One of them is on the picture here on the lower left side of the slide. In April, we also launched a pioneering range of recycled silicones for the label industry, which is a big market for us with 70% lower carbon footprint. So these are only two of many ongoing initiatives, and our efforts are also well recognized by good scores on ESG ratings as the platinum rating from EcoVadis as well as top score on forest and water from CDP.
Coming back to global trade tensions, they are escalating and obviously becoming increased concern. The proposed tariffs are affecting markets around the world, and our industry and markets will for sure be impacted also by these shifts in in trade policies. We expect that local and regional content throughout value chains will have increased importance in many industry segments and where access to and control of raw or critical raw materials will be key. And we think Elkem is well positioned for this, and our strategy has been for quite some time to operate geographically diverse and independent value chains. This means a regional business model where most of raw material sourcing, production, and sales take place within each geographic region.
In other words, most of what we sell in the Western part of the world are produced in Europe and The Americas, and most of what we produce in China is sold in the Asia Pacific region. So it is a bit early to say exactly how these global trade tensions will play out and how we will be affected. But I think it’s important to note that both the EU and The US are net importers of LCAMS products, including silicon, ferrosilicon, foundry alloys, and silicones. So we do think that potential tariffs likely will be counterbalanced by increased prices. So let’s move on to the market update and the outlook.
As I indicated, global trade tensions and changes in trade policies are creating a high level of uncertainty. These changes are expected to attack global economic prospects and contribute to rising inflation and tightening financials financial overall conditions. Current economic indicators, are pointing to slower growth, and the business and consumer confidence, has declined. OECD and other institutions have updated their GDP forecasts, which are depicted on the slide here. And the table to the right shows the latest latest GDP projections from OECD from March.
So they are lowering their projections for key economies, including The US, China, and the Euro Area. So how is this impacting Elkem? And it is creating uncertainty as I have mentioned. However, I think it’s important to highlight some opportunities as well that may come out of this. And keep in mind that Elkam has a very diversified global footprint.
The proposed tariffs where we are located are all in the low end of what has been proposed by The US ranging from 10 to 20%. Elkem’s plant in Canada currently has no tariff. The exception is, of course, China. But our sales from China to The US are on a very low level. In addition to the general tariffs, The US have also imposed ADD and CVD duties on ferrosilicon from Kazakhstan, Malaysia, and Brazil.
And the EU are also assessing trade defense measures that could be positive for our industry and in order to prevent dumping. The direct impact could, therefore, be limited on L chem, but the indirect impact through reduced market demand is obviously where the most of the uncertainty is located and could become more substantial. Automotive is an important sector to to Elkim and drives demand for many of our products and materials. The global auto industry is also important to many countries, which are now evaluating how to cope with the impacts of the new tariffs and tensions. Demand is showing some signs of recovery, and production forecasts have been revised up.
However, the situation remains vulnerable to new policies and and the trade barriers. In Europe, the automotive industry has faced challenges from electrification and weak demand. The EU is trying to address this and have made revisions to the COP regulations. These regulations include requirements for allowed c o two emissions per kilometer for cars sold in in the 27 member states. Following these revisions, the expected production has been upgraded to 16,700,000 units in 2025 and ’17 point 3,000,000 units in 2026.
The outlook in China has been increased to 30,700,000 units for this year and 31,800,000 units for 2026, also driven by a vehicle scrappage policy and strong growth in the EV segment. Similar modest growth is also expected in the in The Americas. In addition to automotive, the construction and infrastructure markets are very important to Elcam. Defense spending is also an area that is expected to drive increased demand going forward, particularly because of the high focus on reliable access to critical materials. Germany has announced a package for increased defense spending and a €500,000,000,000 infrastructure fund.
The initiative is to overhaul the country’s infrastructure network, modernizing areas such as energy, transportation, digitalization, etcetera. NATO and the EU’s rearm EU initiative aim to strengthen and protect the supply chains and increase defense spending. And silicon is one of the materials included in the defense critical supply chain security roadmap to make a chart. Ferrosilicon and ferroalloys are used to produce different steel qualities and are important both in infrastructure and in the defense industry. So as one of the world’s largest suppliers of both silicon and ferroalloys, Elcam expect to benefit from increased demand when this will start picking up.
Let’s take a closer look at the markets and start with silicon. Very much affected by uncertainty level as already mentioned several times. The longer term outlook, though, is quite positive. As mentioned, the new fiscal package in Germany and higher defense spending in Europe are expected to improve demand. EU silicon prices remained stable in the first quarter, but were under pressure due to imports and have declined by slightly more than 10% in the EU after we entered the second quarter.
The US silicon market is experiencing oversupply, which is putting a downward pressure on sales prices in that region. And in China, silicon prices have continued to drop due to weak demand and higher inventory levels. And the decline in Chinese demand is largely explained by a decrease in polysilicon production, which was down 45% in January, February compared to the same period last year. Moving on to ferrosilicon, we have many of the same drivers, obviously, as in silicon. Prices in The EU rose slightly during the first quarter due to demand from steel and lower inventories, particularly was just the case in Germany.
But the high imports into The EU have imposed a renewed downward price pressure, and we have seen a modest decline now going into the second quarter. In The US, ferrosilicon prices remain stable. However, potential tariffs and ongoing trade cases are influence influencing the market, obviously. In China, ferrosilicon prices are decreasing as a result of weak demand from the steel industry combined with higher inventory levels. And as we know historically, low prices in China are also putting some pressure on prices in other regions.
Then moving on to silicones. In the first quarter, we have seen seasonally low demand in most regions with some exceptions for silicone specialties. The demand recovery in China has been weaker than expected, and this is particularly the case in sectors like construction, textiles, and the chemicals. Despite this, we have seen higher DMC prices in China during the first quarter. They reached a high of 14,600 RMB per ton by the end of the quarter, mainly driven by reduced production and strong willingness among producers to sustain a higher price level.
And by by by reducing production capacity utilization. However, moving into the second quarter, we have seen a decline in DMC prices of more than 15%, impacted, we think, by the big changes in in trade tensions. The silicones markets in The EU and The US were impacted by seasonal factors and weak commodity demand. But in general, demand for specialties have held up quite well. The market for carbon products is much smaller than for silicon and or for silicones and silicon, and we do not have any good reference prices here.
But demand varies across regions, mainly driven by steel, ferroalloys, and aluminum production. And in the first quarter of twenty twenty five, the global steel production was down 3% compared to the same period previous year, and there has been a decline in all regions. Europe experienced a 7% drop, while North America saw a 3% year on year decrease. So although the steel and ferroalloy markets are currently weak, specialty portfolio of carbon solutions is supporting still a very stable financial performance. Then let me take you through the outlook.
So as mentioned, markets are characterized by significant uncertainty due to all the changes in trade policies. However, I think it’s very important to keep in mind that Elchim is relatively well positioned due to our diverse geographical presence and also the fact that we have isolated or made our value chains independent of each other, especially comparing east and west. Silicones markets are likely affected by trade tensions, but disruptions in the Chinese markets may be compensated by new opportunities for our French production sites. So when Chinese exports are kept out of The US, there would be obviously an attempt to look for other sources of import with lower tariffs. Silicon products continue to face low demand.
The EU reference prices for silicon metal have declined early in the quarter in the second quarter. And but the division still benefits from strong cost and market positions. And in carbon solutions, we are in a very good positions in terms of market and cost, and we have a very geographically diverse position. So I think with that, I’ll give the word to you, Watten. Take us through the financials.
Morten Vega, CFO, Elkem: Thank you very much, Helge, and good morning, everybody. So I am certainly pleased to go through the results for the first quarter in more detail. Our operating income for the quarter amounted to 8,000,000,000 NOK. That’s up 1% compared to the first quarter last year. The silicones division reported increased operating income, which was mainly explained by higher sales volume.
And also, carbon solutions had a small increase in operating income, while silicon products had a reduction due to the weak market sentiment. The EBITDA for the quarter was close to million for the group. Silicones and Carbon Solutions delivered improved EBITDA compared to the first quarter twenty twenty four, while Silicon Products was behind Q1 twenty four. The reported group EBITDA margin was 11% for the quarter, which is below our long term target of 15% to 20% EBITDA margin through the cycle. However, EBITDA for the continuing operations, I.
E, Silicon Products and Carbon Solutions, amounted to 16%, in line with the long term target, and this even in a very difficult market situation. Clearly, Elkem’s strong cost and market positions remain unchanged, and this is the main reason that we generate fairly good margins even in a very weak market sentiment. There were no particular one offs affecting the EBITDA this quarter. As usual, we provide an overview of some of the main financial numbers and ratios. I will not go into detail on all of them, but it’s important to note that the silicones division division has been reclassified as discontinued operations and assets held for sale.
The p and l, cash flow and balance sheet in the financial report reflect Elkem results excluding silicones. In the table to the right, you can see comparable figures for Elchem with and without silicones. In this presentation, we mainly refer to Elchem Group including silicones, as the division is still part of the group and management’s responsibility. The group EBITDA was $898,000,000, where the segment other include realized currency hedging losses of minus NOK 34,000,000. Other items amounted to minus NOK 7,000,000, and these main items were gains on power and currency derivatives of NOK 38,000,000 and restructuring expenses of minus NOK 25,000,000.
Net finance expenses were minus NOK 192,000,000, consisting of net interest expenses of minus NOK 171,000,000 and currency losses of NOK 15,000,000. Tax amounted to minus NOK $132,000,000 in the quarter despite a loss before tax, and this is mainly due to negative taxable income for silicones. Let’s then take a look at divisions and start with the silicon products division. The division reported total operating income of 3,500,000,000.0, that’s down 12% from the first quarter last year. And this is mainly explained by lower sales volumes caused by weaker market conditions.
The EBITDA was 489,000,000 NOK, which was down 28% compared to the first quarter last year. The EBITDA margin amounted to 14%. As already mentioned, the division was impacted by generally weak market sentiment with generally low prices and thin demand. In addition, the quarter was also negatively impacted by maintenance stops at several plants in Norway and and power curtailment in in Iceland. The negative EBITDA impact related to the maintenance stops and power curtailment amounts to approximately minus NOK 75,000,000 for the quarter.
The demand situation was weak in the first quarter, and the sales volume was, as I said, down approximately 10% compared to the same quarter last year. The carbon solutions division continues to show strong financial performance despite challenging markets. Total operating income amounted to NOK $860,000,000, which is up 3% compared to the first quarter last year. And this is mainly generated by favorable sales mix and currency effects, which was partly countered by somewhat lower sales prices. EBITDA amounted to $261,000,000, which was up 5% from the same quarter last year.
And the EBITDA margin was 30%, which once again represents a very good and stable level in a difficult market situation. The improved EBITDA is mainly explained by favorable sales mix and positive currency effects. The demand was quite low in the first quarter with unchanged sales volumes compared to the first quarter last year. And as we have said before, the division is clearly benefiting from very strong market positions and now also higher sales from the new expansion project in Brazil. As mentioned, the silicones division is under strategic review.
The division delivered total operating income of almost NOK 3,800,000,000.0 for the quarter. That’s up 16% from the first quarter last year. EBITDA amounted to NOK $2.00 1,000,000, which also was better than first quarter last year. The higher operating income was explained by higher sales volumes also from our new expansion project in China, but this was partly countered by lower commodity sales prices. The division has improved significantly its cost position after, among others, the expansion and upgrading project in in China.
And this has certainly made the division more competitive on commodity products, securing higher margins even in a very weak market sentiment. The result was, however, negatively impacted by maintenance stops both in France and China. In addition, the Chinese New Year also impacted the result when comparing to the previous quarter last year. The negative EBITDA impact related to the maintenance stops in France and China is calculated to approximately minus NOK 50,000,000 for the quarter. Sales volume was up 34% compared to the first quarter last year, mainly in Asia Pacific region.
We will now take a closer look at some of LCHEM’s key financial ratios. The EPS earnings per share was negative in the first quarter with minus NOK0.33 per share. And we are, of course, not satisfied with this, but we should bear in mind that the EPS was negatively impacted by losses from the silicones division, which is under strategic review. If we exclude silicones, the EPS for the first quarter would have been plus 0.21 per share. The balance sheet is very solid.
Total equity amounted to NOK 24,900,000,000.0 by the end of first quarter, which gives an equity ratio of around 50%. The total balance sheet values and equity were lower compared to year end, mainly due to currency movements. Elkem’s financing position remains robust and stable, and it’s our clear focus to keep a strong liquidity position and a smooth maturity profile on our debt. The net interest bearing debt amounted to billion as per the end of Q1. This was up by NOK 700,000,000 from the previous quarter.
As you can see from the graph to the right, Elkem has very low upcoming installments in 2025 and even in 2026. Based on last twelve months EBITDA, the debt leverage was 2.5 times, which is unchanged from year end. The target is to bring the leverage within LCAM’s communicated target between one to two times EBITDA. By the end of Q1 twenty five, Elken’s interest coverage ratio was 5.6 times, which means that we are well above the covenant level in our loan agreements, which is minimum 4x. The cash flow from operations amounted to plus $97,000,000 in the
This is negatively impacted by working capital changes, mainly explained by higher trade receivables and lower trade payables. This was partly offset by lower inventories, which was according to the plan due to increased inventories towards year end, and where we also prepared for planned maintenance stops in the first quarter. Also here, the numbers are negatively impacted. The cash flow is negatively impacted by silicones. And if you exclude silicones, the cash flow from operations would have been almost NOK 400,000,000 for the quarter.
We will continue to focus on a very disciplined capital spending as long as the weak market conditions prevail. In the first quarter, total investments were down to $414,000,000. The major part of this is reinvestments amounting to NOK $362,000,000, which equals 51% of depreciation. Strategic investments were only NOK 52,000,000 as the major part of our project portfolio was completed last year. So let me wrap up this presentation by summarizing the main headlines and take takeaways for from the quarter.
The markets are clearly characterized by significant uncertainty due to the ongoing disputes on trade And this clearly means that LCHEM’s main focus going forward will be on cash generation and disciplined capital spending. Silicones is benefiting from significantly improved cost positions both in China and France. But the trade tensions will likely affect our business. But LCAM’s geographical footprint with a regional business model will clearly also provide some good opportunities.
Silicon products continue to face low demand, but is well positioned due to strong cost and market positions compared to all competitors. Carbon solutions also continues to benefit from excellent cost positions and geographically diverse market positions. The strategic review for the silicones division is ongoing, and the target is clearly to conclude the process well ahead of the year end. But right now, it’s not possible for us to go into the detail about this process. And with that, I think we are through our presentation.
And I’d like to hand the word back to Odga for the q and a session. Thank you.
Oguer Lingsta, Investor Relations, Elkem: Thank you for that, Martin. We have a few questions related to mainly results, outlook, and the strategic review process. So I’ll take them as they have come in. First question is if we can say something about the impact of the of the maintenance stops and how they have impacted the results. You mentioned that, but to make sure that the it’s well understood, the impact from the maintenance stops and curtailments and and how that has been, and also if the plants have resumed operations in April.
Morten Vega, CFO, Elkem: Sure. So it follows the the nature of our business model that we need to have maintenance stops from time to time to secure excellent technical conditions of of our assets. We have, however, accelerated some maintenance projects now to to to do that in a low low low business cycle and then be prepared to run full blast when things are moving up again from from the market side. So we have particularly done maintenance work in some of our Norwegian silicon product smelters and also in in Iceland. The direct loss from this expensed costs and also lost revenues and and margins amounts to approximately 75,000,000 NOK for the quarter.
And similarly, we’ve had a major maintenance stop in France and also a maintenance stop for our upstream upstream business in in silicones in China. And the loss from from these stops is calculated to 50,000,000 NOK for the quarter, I e, in total, 125,000,000 NOK for the quarter.
Oguer Lingsta, Investor Relations, Elkem: Very good. And there is also a question if there will be more maintenance stops or curtailments in the second quarter?
Morten Vega, CFO, Elkem: We have we don’t plan with any extensive maintenance stops in the second quarter. And we clearly believe that the situation with curtailment that we’ve had in Iceland is being improved. Then
Helge Austin, CEO, Elkem: there is a question more related to COVID outlook because with the negative price movement we have seen in silicon metal, will that have any effect on the volumes in addition beyond the silicones or the silicon metal? Will that impact also foundry products and other other product categories? I’m relatively optimistic about the situation going forward. We Elkem is relatively speaking very well positioned. And as Martin explained in detail, there has been some volume reductions due to maintenance stops in the q one.
And we don’t plan for that in the q two. So I think the top situation should be possible to to maintain the current the current run rate. That’s the way we we look at it. But, again, of course, we talked a little about an indirect effects that are difficult to predict right now. So let me keep that also as part of my answer.
Oguer Lingsta, Investor Relations, Elkem: And there is also a question on trading patterns in the first quarter. If there has been any prebuying from customers and if there have been any change to to trade flows as such?
Helge Austin, CEO, Elkem: No. Relatively small movements. We saw some but that was mainly in the fourth quarter, actually. But we saw some buildup of foundry alloy materials in The US in the anticipation of Paris. It never happened.
So so but it’s not not having any material impact.
Oguer Lingsta, Investor Relations, Elkem: And then last questions are related to the strategic review, and it’s obviously if it’s impacted by the the trade tensions and the and the trade war. So the question is if The US tariff situation has impacted the timeline and negotiations with potential buyer buyers and also if the potential buyer’s
Helge Austin, CEO, Elkem: the silicones segment has been kind of reduced or impacted by the the recent development. No. Obviously, a question we we we had expected. It’s the we cannot really go into any details about the process for obvious reasons. It’s well underway.
And based on the situation today, we expect to to close that by the end of the year as as planned.
Oguer Lingsta, Investor Relations, Elkem: So that concludes kind of the questions we have received on the webcast. I would like to just check if there are any questions among the people present here in the audience. Doesn’t seem to be that. So with that, I thank Helio and Martin for the presentation, and thank you very much for participating. And that concludes our presentation for
Morten Vega, CFO, Elkem: the first quarter. Thank you. Thank you.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.