Elkem

Earnings Release • Feb 12, 2019

Fourth quarter concludes an extraordinary year for Elkem

Fourth quarter concludes an extraordinary year for Elkem

Oslo, 12 February 2019: Elkem completes a strong 2018, but fourth quarter

earnings hampered by weaker market sentiment, especially in China. Sales prices

and volumes in China have been affected by lower demand and maintenance stops.

Considering the challenging market conditions the result was relatively strong.

Total operating income for the fourth quarter 2018 was NOK 6,265 million, which

was in line with fourth quarter 2017. EBITDA for the quarter amounted to NOK 974

million, down from NOK 1,078 million in the corresponding quarter last year.

Earnings per share (EPS) was NOK 0.64 in fourth quarter, giving accumulated EPS

of NOK 5.74 in 2018.

The board has proposed a dividend of NOK 2.60 per share, which amounts to 45% of

the profit for 2018 in line with Elkem's policy and based on an extraordinary

strong year with leverage is below target.

"Weaker market conditions in China have resulted in lower sales prices and lower

volumes for core silicone products. Therefore, Xinghuo Silicones has been

operating below full capacity rate in the quarter. As announced, Yongdeng

Silicon Materials have completed technical upgrades of two furnaces resulting in

lower production and sales. The average sales prices in the fourth quarter have

generally been higher than the corresponding quarter last year, but this has

been offset by higher raw material costs and lower sales volumes. The fourth

quarter was also negatively affected by special items and one-off effects of

approx. NOK 55 million," says Helge Aasen, CEO of Elkem ASA.

Elkem raised new financing of NOK 1,750 million in the Norwegian bond market and

EUR 215 million in the German Schuldschein market during the fourth quarter. The

new loans have maturities ranging from three to seven years and have partly been

used to refinance local bank debt in China. Recapitalisation of Xinghuo

Silicones and Yongdeng Silicon Materials were completed in December 2018 and

January 2019.

The group's equity as at 31 December 2018 amounted to NOK 13,722 million, giving

a ratio of equity to total assets of 44%. Net interest-bearing debt was NOK

3,264 million, which gave a ratio of net debt to EBITDA of 0.6 times. The group

has a strong liquidity position and a well distributed loan maturity profile.

The company's fundamental position continues to be strong based on favourable

market positions and strong financials. The current market sentiment is weak,

partly due to seasonality in sectors such as construction. Market prices have

however, stabilised and are likely to increase after first quarter.

First quarter 2019 is expected to be weaker than fourth quarter 2018, mainly due

to temporary production curtailments, and lower average realised sales prices

due to time-lag and effects of Chinese New Year.

Subsequent quarters in 2019 likely to improve based on expected higher sales

volumes, price recovery, lower raw material costs and accelerated improvement

programmes.

Contact information:

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|Morten Viga CFO |Odd-Geir Lyngstad

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|Phone: +47 416 09 752 |VP Finance & Investor Relations Phone: +47 976

72 806|

|Email: morten.viga@elkem.no|Email: odd-geir.lyngstad@elkem.no

|

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About Elkem ASA

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, and is headquartered in Oslo. The company has 6200

employees with 27 production sites and sales offices in a total of 28 countries

worldwide. In 2018 Elkem had revenues of 25.9 billion NOK. To learn more, please

visit www.elkem.com