Elkem breaks even, silicones profits hit by Covid

Oslo – Elkem SA has reported a flat second quarter despite slow demand and the challenges posed by Covid-19 pandemic. 

Earnings fell slightly, 0.4% year-over-year, to Nok644 million (€61 million) on 2% higher sales of Nok5.8 billion during the second quarter, the Chinese-owned Norwegian materials supplier reported 17 July.

The company linked the above-average performance to ‘high capacity utilisation, strong operational performance and good market and cost positions.’

The silicones division, which represents more than half of overall sales, posted an 11% increase in revenue at Nok3.1 billion for the quarter. 

Higher income was mainly attributed to higher sales volumes and the consolidation of China-based Polysil from 1 April 2020. 

Segment earnings for the quarter fell 35% to Nok217 million, mainly due to lower sales prices in China. In addition, earnings were was negatively impacted by lower sales of specialty products due to weak markets, particularly automotive. 

Over the first six months, the division reported a 46% decline in earnings at Nok770 million, on flat sales of Nok5.6 billion.

Results were impacted by lower sales prices largely explained by negative market developments caused by Covid-19. 

Elkem noted that the pandemic continues to impact global markets, demand and sales prices. However, it said, the market development in China is showing signs of recovery.

Going forward, Elkem expects the markets to continue to be characterised by low visibility due to the Covid-19 effects. 

According to the company, silicones demand in China is “good, driven by government incentives, but sales prices may be volatile.” 

Demand for silicones outside of China is weak, which is negatively impacting the sales of specialty products.