Elkem ASA

All figures are NOK million unless stated. They are the Elkem group as reported for each year, on the pre-divestment perimeter.

Income statement

Notes: - FY2022 total operating income is from the 4Q-2023 comparatives; the 4Q-2022 release showed EBITDA of 12,887.

• FY2023 total operating income was later restated to 34,760, which gives an EBITDA margin of 10.8%.

• Elkem said FY2025 EPS excluding Silicones would have been NOK 0.61.

• Gross profit is not a reported Elkem line; aggregator "gross profit" figures use a different definition and are excluded.

• Diluted EPS was not separately disclosed in the releases reviewed and is materially equal to basic.

Revenue CAGR FY2021→FY2025: −2.2% a year (33,717 to 30,806).

Peak-to-current: FY2025 revenue is 33% below the FY2022 peak, and FY2025 EBITDA is 74% below it.

Quarterly bridge, 2025 to 2026:

Q1-26 and Q2-26 are on the continuing-operations perimeter. Q1-26 operating income is shown rounded at about NOK 4.0bn (down 7% YoY). Q1-26 EPS is as reported by Investing.com. Q2-26 EPS from continuing operations was −0.15; the reported −2.09 includes the divestment and discontinued items.

Balance sheet

How the derived values were obtained: - FY2021 equity is derived from the 1Q-2022 statement that equity was BNOK 22.9, up BNOK 3.0 from year-end 2021, so about 19.9bn.

• FY2022 equity is derived from the 4Q-2023 statement that equity was BNOK 24.5, down 4.3 from year-end 2022, so about 28.8bn.

• FY2023 equity of 24,458 is implied by the FY2024 report, which shows equity up NOK 1,562m to 26,020.

• FY2021 and FY2023 NIBD/EBITDA are calculated here; FY2024 and FY2025 are company-reported.

Undrawn lines are shown as "more than" the stated amount: - See the FY2025 annual report notes.

Post-transaction balance sheet (30 June 2026, continuing group):

The fall in equity from 24.0bn to 12.6bn reflects the redemption of Bluestar's 52.9% stake against the Silicones net assets, offset by the NOK 1.8bn equity raise.

Cash flow

Dividend cash is derived as DPS × about 634m shares, paid in the year after the earnings year: 2021 DPS paid in 2022, 2022 DPS paid in 2023 (company states BNOK 3.9), 2024 DPS paid in 2025. No buyback programme has been disclosed in the period. Elkem holds about 5.2m treasury shares acquired earlier.

Recent cash-flow datapoints:

• 2Q-2025: operating cash flow NOK 308m; investments excluding M&A NOK 464m.

• 2Q-2026: operating cash flow NOK 733m; investments NOK 192m (NOK 171m of it reinvestment). H1-2026 investments were NOK 304m against a 2026 cap of NOK 1.0bn.

• Working capital fell by NOK 841m between end-2025 and 30 June 2026, against a NOK 1.0bn target. Inventory had already fallen by about NOK 500m in 1Q-2026.

• 2024 improvement programme: NOK 2.2bn capex reduction versus the original plan.

Ratios

ROE is derived. FY2024: 577 / average equity of 25,239. FY2025: EPS −1.05 × about 634m shares, roughly −666m, over average equity of about 25,023; this is an approximation. Interest cover was about 6x at 1Q-2026, then replaced by the leverage covenant.

Commentary

FY2021–FY2022: super-cycle. Supply disruption in China (energy dual-control policies in 2021), strong silicones pricing and European energy-crisis pricing for silicon and FeSi in 2022 drove EBITDA to a record NOK 12.9bn, a 28% margin. Elkem paid out 40–41% of profit, in line with its 30–50% dividend policy.

FY2023: sharp reversal. Chinese silicones capacity came online, silicones prices collapsed and the division's EBITDA turned negative (−605m). Silicon and FeSi contract prices also fell. The Salten fire and an Iceland maintenance stop cost about NOK 85m in 4Q alone. EPS fell to NOK 0.11 and no dividend was paid.

FY2024: partial recovery through self-help. The improvement programme added more than NOK 1.7bn of EBITDA improvement and Silicones returned to positive EBITDA (521m). Silicon Products and Carbon Solutions weakened on prices, however. NIBD rose by NOK 1.95bn to 10.3bn as capex for Chinese silox expansion continued.

FY2025: grinding weakness. EBITDA was NOK 3.42bn (11% margin), below the company's long-term target range of 15–20%. Silicon Products EBITDA fell 53% in both 3Q and 4Q. Silicones improved on cost actions but still produced a negative group EPS of −1.05. Leverage reached 3.5x, well above the 1–2x target. This was the financial backdrop that made the no-cash Silicones exit and the equity raise necessary.

1H-2026: transition. Production curtailments at Rana and Salten pushed 1Q EBITDA down 65% to NOK 249m. Both plants restarted in 2Q, all furnaces were at full capacity by June, and the cost programme began to bite, lifting 2Q EBITDA to NOK 523m (14% margin). That figure beat consensus by about NOK 130m, helped by an FX-hedging gain in "Other". Leverage halved from 5.0x to 3.2x after the equity raise and working-capital release.

Management guidance (2Q-2026)

Silicon Products: Markets remain challenging, with seasonal weakness in 3Q. EU trade protection and cost cuts should gradually support prices and margins.

Carbon Solutions: More stable performance expected.

Cost programme: Most of the more than NOK 600m in annual savings flows from 3Q-2026.

Capex: At most NOK 1.0bn for 2026. Working-capital target of NOK 1.0bn.

No quantitative EBITDA guidance: Details are due at the 29 Oct 2026 capital markets update.

Consensus

Average target prices of about NOK 36 imply around 9% upside. Rating skew is "Buy" per StockAnalysis aggregation.

Bull case

1. Earnings lever. At full furnace utilisation with NOK 600m of fixed-cost savings, a recovery of European silicon prices toward mid-cycle could plausibly lift EBITDA well above the NOK 2.0bn LTM. 2Q-2026 already beat consensus by about NOK 130m.

2. De-risked balance sheet. Leverage at 3.2x with NOK 9bn+ of liquidity and long-dated PPAs leaves room for an orderly deleveraging toward 1–2x from cash flow alone.

3. Trade protection in Europe plus a valuation reset. EU safeguards support FeSi. The stock trades at about book value and roughly 9x LTM EBITDA on trough earnings, with no controlling-shareholder discount any more.

Bear case

1. US duties. A combined rate of about 19.7% structurally impairs a historically important export market for Norwegian silicon. CIT appeals typically take years.

2. Persistent Chinese overcapacity. This could hold silicon prices at trough levels. Ferroglobe's 2.1% adjusted EBITDA margin in 2025 shows how deep the downturn is for western producers.

3. Execution and governance. A new CEO, a former CEO as chair, the Iceland exit costs, and a CDP downgrade plus HSE fatalities could delay the margin recovery toward 15–20%.

Catalysts and monitorables (next 12 months)

Analyst verdict

Elkem in October 2026 is a fundamentally different company from the one that earned NOK 12.9bn of EBITDA in 2022. The Silicones exit traded half of group revenue for the cancellation of Bluestar's 52.9% stake, with no cash changing hands. That was an elegant solution to two problems at once: a structurally challenged, China-exposed silicones business, and a controlling-shareholder overhang. The minority shareholders now own 100% of a smaller, more focused, more European business with genuinely advantaged assets: CRU-rated low-cost silicon plants, global niche leadership in electrode paste and foundry alloys, and premium specialty brands.

The financial reset is largely done. NIBD has halved to NOK 6.6bn, liquidity exceeds NOK 9bn, covenants have been loosened, and the cost programme is running ahead of plan. The 2Q-2026 margin of 14%, achieved at trough silicon prices, is the best evidence yet that the new perimeter can earn mid-teens margins through the cycle.

The investment debate is now about the cycle and about trade policy, not survival. The US AD/CVD orders are a real, lasting headwind for Norwegian silicon. Chinese overcapacity has no obvious end. Leverage of 3.2x leaves little room for another leg down in prices. A new CEO has yet to set out his strategy, and the chair is the long-serving former CEO, which deserves governance scrutiny.

At about NOK 33, roughly 1.0x book and around 9x trough LTM EBITDA, the shares price in a modest recovery, with consensus targets implying high-single-digit upside. The 29 October capital markets update is the decisive near-term event. Credible margin and leverage targets, clarity on Iceland, and a restored dividend framework would support a re-rating. Without them, the stock is likely to trade sideways with European silicon prices. Stance: constructive but catalyst-dependent. Neutral-to-positive bias pending the CMU.