The result for the fourth quarter 2020 was Elkem’s best since 2018. The high
earnings reflect Elkem’s robust business model with strong market positions and
favourable cost positions. This has enabled Elkem to keep close to full
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production through the Covid-19 pandemic so far and now capitalise on the
improved market conditions during the quarter to reach record sales.
Elkem’s total operating income for the fourth quarter 2020 was NOK 7,129
million, which was all-time high and up 28% from the corresponding quarter last
year. Earnings before interest, taxes, depreciation and amortisation (EBITDA)
amounted to NOK 938 million in the quarter, up 81% compared to NOK 517 million
in the fourth quarter of 2019. Earnings per share (EPS) was NOK 0.18 in the
quarter and NOK 0.41 YTD. The board of directors has proposed a dividend of NOK
0.15 per share for 2020, representing a dividend pay-out ratio of 36%.
“In the fourth quarter, Elkem achieved record sales and our highest earnings
since 2018. We see good performance across all business segments, including
Silicones, Silicon Products and Carbon Solutions, and I want to congratulate our
entire global team. This has been delivered while we have also continued to
position Elkem for the future in line with our strategy, always putting health
and safety first,” says Elkem’s CEO, Michael Koenig.
Elkem’s business model shows good results in terms of specialisation,
operational improvements and good cost management. The sales were particularly
strong in China but is also improving in the other regions. Strong demand has
also resulted in higher reference prices for Elkem’s standard products. Elkem is
progressing its productivity improvement programme with the target to realise
annual cost improvements of more than NOK 350 million. By the end of fourth
quarter, the annual run rate was NOK 201 million, which was ahead of plan.
“Elkem’s silicones business has shown a good development in 2020, delivering on
its specialisation strategy. In addition to other recent acquisitions and
initiatives, Elkem has now decided to make investments in organo-functional
silicones (OFS) and low viscosity (LV) silicones fluids. Both projects will
contribute to complementing Elkem’s specialised product offering”, says Koenig.
Elkem will acquire a custom-designed, purpose-built plant for manufacturing of
OFS. The plant is located in France, close to Elkem Silicones’ existing
operations in Lyon. The purchase price is in the low double-digit millions of
euros. The investment in LV fluids will be at Elkem Xinghuo Silicones, the
largest silicones manufacturing site in China. The investment will be CNY 100
million and is scheduled to open in January 2022.
In order to continuously improve and streamline operations, Elkem has decided to
integrate Yongdeng Silicon Products into the Silicones division from 1 January
2021. Yongdeng Silicon has captive production of silicon covering approximately
50% Elkem’s Xinghuo Silicones’ annual consumption.
The battery materials project proceeds according to plan and represents a
significant green value creation opportunity. Elkem’s pilot plant in
Kristiansand has started initial testing to prepare for production start-up in
March 2021. The purpose of the pilot is to qualify products and verify the
business case for a large-scale industrial plant at Herøya, Norway. Elkem has
received NOK 10 million from Enova to fund the initial planning and has also
applied for support from the EU. Elkem will in the near future formally invite
industrial and financial partners to participate in the project.
“Elkem is continuously working to improve its performance within Environment,
Social and Governance (ESG) and has proudly received A rating in corporate
sustainability by CDP, recognising the company among the world’s leading
companies for tackling climate change,” says Koenig.
The group’s equity as at 31 December 2020 amounted to NOK 12,635 million, which
gave a ratio of equity to total assets of 41%. Net interest-bearing debt was NOK
8,058 million, which gave a ratio of net interest-bearing debt to EBITDA of 3.0
times. The leverage ratio was improved from 3.8 times in the preceding quarter.
Elkem had cash and cash equivalents of NOK 3,154 million as at 31 December 2020
and undrawn credit lines of close to NOK 5,000 million.
“Elkem is entering 2021 from a robust position, continuing to improve
specialisation and operational excellence as a basis for further growth. The
market sentiment is positive, but macroeconomic uncertainty still persists,”
says Koenig.
Silicones prices in China are at attractive levels early 2021 and Silicones
demand in Europe and North America is picking up. Chinese New Year will,
however, negatively impact the first quarter results. Prices for silicon and
ferrosilicon have continued to rise early first quarter, with full impact being
gradually reflected in contract prices. Demand is currently strong. The
underlying market conditions for carbon products are expected to improve in line
with stronger steel and ferroalloys markets.
For further information, please contact:
Odd-Geir Lyngstad, VP Finance & Investor Relations
Tel: +47 976 72 806
Email: odd-geir.lyngstad@elkem.no
Fredrik Norman, VP Corporate Communications & Public Affairs
Tel: +47 918 66 567
Email: fredrik.norman@elkem.no
About Elkem
Founded in 1904, Elkem is one of the world’s leading suppliers of silicon-based
advanced materials with operations throughout the value chain from quartz to
specialty silicones, as well as attractive market positions in specialty
ferrosilicon alloys and carbon materials. Elkem is a publicly listed company on
the Oslo Stock Exchange (ticker code: ELK) and is headquartered in Oslo. The
company has more than 6,700 employees with 31 production sites and an extensive
network of sales offices worldwide. In 2019 Elkem had revenues of NOK 22.7
billion. To learn more, please visit www.elkem.com
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