Elkem investing in silicone innovation following record Q1 results

Oslo – Elkem SA is investing in the specialisation of its silicones materials as the company expects continued growth in the segment over the next decade.

The Norway-based supplier is building a NOK150-million (€15-million) flagship research and innovation (R&I) centre in Shanghai, Elkem announced 27 April.

The investment will help the company meet growing demand for advanced silicone products and technologies, according to its statement.

The facility will house several application centres addressing the development trends in industries such as electric vehicles, medical devices, 'leather', airbags, and products for 3D printing.

The new unit, Elkem said, will support a €380-million expansion project at its Xinghuo silicones site, which is expected to generate an additional NOK5 billion in sales from downstream specialisation by 2030.

Plans for the new centre were unveiled as Elkem reported “all-time high” quarterly results, with a strong outlook for the second quarter despite challenges such as higher energy and transportation costs.

Group sales for the three months to end of March came in at NOK11.8 billion, up 65% from the year before.

Earnings (EBITDA) came in at NOK3.8 billion more than 200% higher than NOK1.2 billion reported last year.

The Silicones division reported a 40% increase in earnings to NOK821 million, on 40% higher sales of NOK5.2 billion during the first quarter.

Elkem linked the increases in income and earnings to higher sales prices in all markets.

The company, however, noted that increased sales prices were largely offset by cost increases, particularly for silicon.

Over the short-term, the supplier said it expected its silicones operations in Europe, Middle East, and Africa (EMEA) and the US to “gradually benefit from somewhat lower silicon prices”.

In Asia Pacific, Covid restrictions could still impact demand, Elkem also noted.