Elkem

Earnings Release • Oct 26, 2022

Third quarter 2022: Strong results, despite weaker market conditions

Third quarter 2022: Strong results, despite weaker market conditions

Oslo, 26 October 2022

In the third quarter 2022, Elkem delivered strong quarterly results despite

weaker market conditions. The Silicon Products division and the Carbon Solutions

division continue to deliver excellent results due to superior cost and market

positions. Elkem's plants continue to operate at full capacity, reflecting the

group's robust business model. Elkem today also presents a Capital Markets

Update, outlining the company's strategy for dual-play growth and green

leadership.

Elkem's total operating income for the third quarter 2022 was NOK 11,293

million, up 28% from the corresponding quarter last year. Earnings before

interest, taxes, depreciation and amortisation (EBITDA) amounted to NOK 3,302

million in the quarter, compared to NOK 2,131 million in the third quarter 2021.

Earnings per share (EPS) was NOK 4.81 in the quarter and NOK 13.68 year-to-date,

providing for an attractive dividend yield for 2022.

"The market conditions are weaker, but Elkem is delivering another strong result

for the third quarter 2022. Again, this is demonstrating Elkem's robust,

integrated business model and favourable energy positions. In the quarter, we

have made important decisions to deliver on our strategy, including the opening

of a new specialised silicones facility in the US. We have also closed the

transaction with Hydro and Altor enabling us to further develop Vianode as a

leading supplier of sustainable battery materials," says Helge Aasen, Elkem's

CEO.

"Today, at our Capital Markets Update, we detail Elkem's strategy for dual-play

growth and green leadership. Dual-play growth means that we aim to have a good

balance in the company both geographically and across the value chain, with an

ambition to grow by more than 5% per year, and to do so profitably, with an

EBITDA margin of at least 15% per year. Green leadership means that we aim to be

in the forefront on reducing emissions in our industry, towards net zero by

2050, and that we focus our growth on markets essential to the green transition.

Based on this strategy, Elkem is well-positioned to provide advanced silicon

-based materials shaping a better and more sustainable future," says Aasen.

The result for the Silicones division was weaker than the corresponding quarter

last year, mainly due to higher raw materials costs. The Silicon Products and

Carbon Solutions divisions have however, delivered another strong quarter, with

Carbon Solutions reaching a new all-time high. The results were mainly driven by

higher sales prices, due to increasing raw material and energy costs for the

industry. In this situation, Elkem is capitalising on its favourable cost

positions and integrated value chains.

In September, Elkem, Hydro and Altor Equity Partners completed the transaction

to further develop Vianode as a leading supplier of sustainable battery

materials. Hydro and Altor Equity Partners have each acquired 30% ownership in

Vianode, while Elkem retain the remaining 40% ownership. The transaction was

approved by competition authorities in September. Subsequently, Vianode, with

the backing of its owners, has decided to invest in the first industrial-scale

plant for sustainable battery materials at Herøya in Norway. The investment

amounts to around NOK 2 billion. The industrial plant will produce anode

graphite for about 20,000 electric vehicles (EVs) per year by 2024 and is the

first phase in a larger investment plan to supply a complete battery value chain

for the European market.

In September, Elkem also celebrated the opening of its new specialised silicones

facility in York, S.C. in the US. The facility will produce high purity silicone

materials meeting the strict requirements in medical implantable and

pharmaceutical applications. Elkem aims to be a leading silicone supplier to the

healthcare industry and the new facility opens a potential high margin market of

more than NOK 3 billion.

The group's equity as at 30 September 2022 amounted to NOK 29,176 million, which

gave a ratio of equity to total assets of 54%. Net interest-bearing debt was NOK

2,845 million, which gave a ratio of net interest-bearing debt to EBITDA of

0.2x. Elkem had cash and cash equivalents of NOK 9,750 million as at 30

September 2022 and undrawn credit lines of more than NOK 5,000 million.

The market sentiment is impacted by high energy prices in Europe, macroeconomic

uncertainty and slower growth. The Silicones market in China is weak going into

the fourth quarter, while demand and prices are holding up for specialties in

EMEA and the US. The demand for silicon and ferrosilicon is negatively impacted

by the closures in aluminium and steel industries, but Elkem is capitalising on

superior cost positions. Carbon Solutions will likely see lower demand and

possibly margin pressure due to closures in steel however, from a high level in

the third quarter.

Capital Markets Update

Elkem has two strong, independent value chains; one based in Europe, and one

based in Asia. In addition, the company has strong positions in commodity and

specialty markets due to a combination of good cost positions and extensive R&D

competence. This creates the basis for a strategy of dual-play growth, balanced

geographically and across the value chain. Elkem also aims to take a green

leadership in the industry, strengthening the position as best on low CO\2

\emissions, and growing the supplies to the green transition, including green

venture creations.

Elkem aims for more than 5% revenue growth per year on average on a long-term

sustainable basis, with an EBITDA of more than 15% per year over the cycle. At

the same time, the company will reduce its CO\2\ emissions by 28% from 2020 to

2031, aiming for net zero by 2050.

The Silicones division aims to pursue balanced geographical growth, improve its

cost position and develop a higher degree of specialisation. The Silicon

Products division aims to pursue selective growth, secure its leading cost

positions and achieve lower carbon emissions. The Carbon Solutions division aims

to pursue selective growth, based on sustainable low-cost and a position as a

preferred supplier with high quality.

Elkem also aims to develop Green Ventures: opportunities with a green profile

and focus on value creation. These are based on Elkem technology and process

knowledge, and can be developed with partners to realise scale, achieve

synergies or mitigate risk. When attractive, Elkem will consider sell-down or

possible IPO to realise value.

Currently, Elkem is focusing on developing Vianode into a leading provider of

sustainable materials for the battery market, together with Hydro and Altor. In

addition, the company is developing biocarbon for internal use at competitive

costs and for other external markets. Biocarbon is today the only known CO\2\

neutral replacement for coal in metallurgical processes.

For further information, please contact:

Odd-Geir Lyngstad

VP Finance & Investor Relations

Tel: +47 976 72 806

Email: odd-geir.lyngstad@elkem.com

Fredrik Norman

VP Corporate Communications & Public Affairs

Tel: +47 918 66 567

E-mail: fredrik.norman@elkem.com

About Elkem

Elkem is one of the world's leading providers of advanced material solutions

shaping a better and more sustainable future. The company develops silicones,

silicon products and carbon solutions by combining natural raw materials,

renewable energy and human ingenuity. Elkem helps its customers create and

improve essential innovations like electric mobility, digital communications,

health and personal care as well as smarter and more sustainable cities. With a

strong track record since 1904, its global team of more than 7,000 people has a

joint commitment to stakeholders: Delivering your potential. In 2022, Elkem

obtained a Platinum score from EcoVadis, which rated the company among the

world's top 1% on sustainability transparency, and the company achieved an

operating income of NOK 33.7 billion. Elkem is listed on the Oslo Stock Exchange

(ticker: ELK). www.elkem.com