Elkem

Earnings Release • Apr 28, 2023

First quarter 2023: Good result, but impacted by more challenging markets

First quarter 2023: Good result, but impacted by more challenging markets

Oslo, 28 April 2023

In the first quarter 2023, Elkem delivered a good result, based on strong

performance from the Silicon Products division and the Carbon Solutions

division. The result for the Silicones division was weak, impacted by more

challenging market conditions.

Elkem's total operating income for the first quarter 2023 was NOK 9,934 million,

which was down from the corresponding quarter in 2022, due to lower sales prices

for silicones, silicon and ferrosilicon. Earnings before interest, taxes,

depreciation and amortisation (EBITDA) amounted to NOK 1,565 million in the

quarter, compared NOK 3,875 million in an exceptionally strong first quarter

last year. Earnings per share (EPS) was NOK 1.50.

"The Silicon Products and Carbon Solutions divisions have delivered another

strong quarter, based on superior cost and market positions. The two divisions

have generated strong margins despite weak market conditions. The result for the

Silicones division was, however, weak due to a poor macroeconomic sentiment

combined with overcapacity in China, which have negatively impacted demand and

sales prices", says Elkem's CEO, Helge Aasen.

Given the market situation, Elkem has made the decision to move forward planned

maintenance and temporarily reduce the production at the Silicon Products'

Thamshavn and Rana plants. Elkem will invest around NOK 200 million in

maintenance and improvement at the two smelters, which will enable lower

production costs once stronger market conditions return. Each plant will have

one furnace out for approximately two months.

Elkem is well-positioned with long-term power contracts in Norway, having

secured more than 80 per cent of the electricity supply at competitive rates

until 2026. However, Elkem is continuously evaluating its contract portfolio, as

access to electricity at internationally competitive rates are crucial to

maintain a strong cost position. In the first quarter, Elkem signed new long

-term power agreements, securing additional competitive access to power to the

group's plants in Salten, Rana and Bremanger.

The new contracts secure added predictability for Elkem's plants with an

aggregate volume of 520 GWh per year up to 2035. Elkem uses approximately 81 per

cent renewable electricity in its operations globally, with long-term renewable

power agreements also in Iceland, Canada and Paraguay.

The group's equity as at 31 March 2023 amounted to NOK 29,861 million, which

gave a ratio of equity to total assets of 53%. Net interest-bearing debt was NOK

3,670 million, which gave a ratio of net interest-bearing debt to EBITDA of

0.3x. Elkem had cash and cash equivalents of NOK 11,138 million as at 31 March

2023 and undrawn credit lines of more than NOK 6,000 million.

The market sentiment is still weak going into the second quarter, but Elkem

benefits from strong market positions and robust financials. Elkem is

accelerating planned maintenance work, positioning for expected demand recovery

and improved market conditions. Silicones markets remain challenging, due to

weak sentiment in EU and US, and overcapacity in China. Maintenance stop in

China in May and June will impact the sales in APAC. The markets for Silicon

Products are expected to be stable but weak. The maintenance stops at Thamshavn

and Rana are expected to have modest impact on the results. Raw material costs

are coming down, particularly for reduction agents. Carbon Solutions could be

impacted by lower demand, but performance expected to remain at a good level.

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.normann@elkem.com

About Elkem

Elkem is one of the world's leading providers of advanced silicon-based

materials 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

7,300 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 45.9 billion. Elkem is listed on the Oslo

Stock Exchange (ticker: ELK). www.elkem.com