Quarterly results and headline metrics
Norwegian silicon materials producer Elkem reported second-quarter EBITDA of NOK 523 million, outstripping the consensus analyst forecast of NOK 377 million. The company noted a 19% decline in EBITDA compared with the year-earlier period.
Operating income for the quarter fell 4% from the prior year to NOK 3.71 billion. Management attributed the drop primarily to lower sales prices for silicon and ferrosilicon products, which reduced revenue and weighed on results despite the EBITDA beat versus analyst expectations.
Balance sheet moves and liquidity
During the quarter Elkem completed an equity raise of NOK 1.8 billion and undertook a refinancing of its main bank facilities. The financing actions were presented as measures to strengthen liquidity and the company’s financial flexibility.
Cost program and operational changes
The company’s cost reduction program delivered outcomes that exceeded initial targets. As a result of organizational streamlining and targeted cost cuts, Elkem now expects the program to deliver annual savings above NOK 600 million going forward. Management said these savings will begin providing incremental benefits starting in the third quarter.
Segment performance
The Carbon Solutions segment recorded lower EBITDA in the quarter, with the decline tied to both reduced sales volumes and lower average sales prices over the period. The report did not provide additional segment-level metrics beyond this characterization.
Near-term outlook
Looking to the third quarter, Elkem anticipates seasonally lower activity to weigh on the Silicon Products division. By contrast, the company expects Carbon Solutions to maintain generally stable financial performance in the coming quarter. Management reiterated that the ongoing cost reduction program will continue to contribute positively beginning in Q3.
Bottom line
Elkem delivered an EBITDA result that exceeded analyst expectations even as lower silicon and ferrosilicon prices softened operating income. The company strengthened its liquidity through an equity raise and refinancing and accelerated cost reductions that are projected to yield material annual savings.