Elkem Silicones returns to black but market conditions ‘still weak’

Oslo - Elkem Silicones has reported improved results in the second quarter of 2024 but remains cautious about overall market conditions.

During the three months to the end of June, the silicones division posted a 10% year-on-year increase in sales to NOK3.7 billion (€315 million), the Norwegian group said on 12 July.

Earnings (EBITDA) returned to the black at NOK45 million from a loss of NOK374 million reported in the second quarter last year.

For the first half, the division narrowed its loss to NOK57 million from NOK405 million last year, while sales were down 6% at NOK7.1 billion.

Elkem linked higher sales to increased volume, partly offset by lower sales prices. The earnings increase was mainly due to higher sales volume and operational improvements.

Furthermore, the second quarter last year was negatively impacted by NOK170 million related to a maintenance stop in China and inventory write-down.

Elkem noted an increase in volumes "in all regions" during the second quarter. Year-to-date weak results were mainly due to "challenging market conditions" and oversupply in China.

"The result for the silicones division improved, but from a weak level," said Elkem in its statement.

Market conditions, it added, "are still weak, due to soft demand and Chinese overcapacity which has caused continued pressure on commodity sales prices."

During the three-month period, the Norwegian group said its silicones expansion project in China was finalised "on time and on budget."

"The start-up was successful and has exceeded expectations," Elkem said.

The group expects the financial impact of the project to be "modest" until the production line is fully ramped up.

However, it noted that "positive contributions" were achieved already in the second quarter.

The new line is expected to improve Elkem’s cost position, environmental performance, and deliver higher upstream product quality, according to CEO Helge Aasen.

On the market outlook, the group leader said Elkem Silicones expects improved demand in Europe and the US, but the Chinese market is still hampered by overcapacity.