Elkem reported robust third-quarter 2026 results in what CEO Dag Teigland described as challenging markets, according to the company's Q3 2026 results and Capital Markets Update earnings call, published by Yahoo Finance (Quartr) on 29 October 2026. Operating income was NOK 3.6 billion, down 2% year on year, mainly due to lower sales prices. EBITDA was NOK 554 million, down 14% from the third quarter of 2025 but improved sequentially, giving an EBITDA margin of 15%.
Net profit rose to NOK 319 million from NOK 29 million a year earlier, supported by currency gains of NOK 314 million linked to a stronger Norwegian krone, according to CFO Morten Viga. By division, Elkem Silicon reported operating income of NOK 2,142 million, down 9%, and EBITDA of NOK 127 million, down 43%. The CFO attributed the decline to lower silicon and ferrosilicon prices and negative currency effects, partly offset by the materials and microsilica product lines and the cost reduction programme.
Elkem Foundry Alloys improved its performance, with EBITDA of NOK 235 million, up 7% year on year, accounting for 43% of group EBITDA. Elkem Carbon reported operating income of NOK 782 million, down 5%, and EBITDA of NOK 183 million, down 21%, with management pointing to early signs of improvement in certain markets. The balance sheet was described as strengthened during the year.
Net interest-bearing debt was NOK 6.5 billion at the end of the third quarter, equal to a leverage ratio of 3.3x last twelve months EBITDA, compared with 4.3x in the first quarter, according to CEO Dag Teigland. Cash stood at NOK 5.5 billion and the equity ratio was 45%. Working capital reductions for continuing operations reached almost NOK 1 billion, operating cash flow was NOK 421 million in the quarter and NOK 1.4 billion year to date, and year-to-date investments amounted to NOK 510 million.
Elkem raised NOK 1.8 billion in new equity and refinanced EUR 1 billion of bank facilities with ten relationship banks earlier in 2026. On costs, the company said it had reduced manpower by around 400 positions against a target of 300, and that indirect costs were being reduced by NOK 600 million annually, with the full effect expected to show in the fourth-quarter P&L. The Silicones business has been sold to Bluestar.
Retained assets are classified as discontinued operations and remain under strategic review. These include Elkem Silicon in Roussillon, France, Silicones India, and the Yongdeng plant in China, which was closed in 2025. Elkem Iceland is also under strategic review; in October the company signed a new power purchase agreement covering 127 MW, or approximately 1,035 GWh per year, for 2026-2029.
Management said further measures would still be needed to restore profitability to an acceptable level and could not give a timeframe for concluding the reviews. A NOK 260 million investment to replace one of the two furnaces at Elkem Rana is scheduled to start in the first quarter of 2027 and last three to four months. In September, Elkem received 1.3 million additional free emission allowances under the EU ETS for 2021-2025, following a conclusion by the Norwegian Ministry of Climate and Environment that Norwegian producers had been treated unequally compared with EU producers.
Future allowances for the Norwegian plants are to be in line with comparable EU industry. Management said the allowances are carried at zero value, while their estimated fair value is around NOK 1.2 billion, and that they are to be sold over time. On markets, management described conditions as mixed.
The Eurozone PMI stood at 43.4, signalling continued contraction, and residential construction remained weak, while AI and data centre infrastructure were cited as growth areas. Silicon prices have increased modestly from historic lows, with EU reference prices rising marginally early in the fourth quarter as buyers increasingly prefer European material, and US silicon prices continuing to rise on tight supply and low inventories. EU ferrosilicon prices were marginally lower in the third quarter.
Management said persistent Chinese oversupply continues to weigh on reference prices, with Chinese silicon prices at record lows and China's global silicon exports up 4% so far this year. Management also cited disruption to supply and logistics from the Middle East conflict. On trade defence, the European Commission has initiated an interim review of anti-dumping duties on Chinese silicon, currently at 16.8%, to assess whether they are sufficient.
On 23 October the Commission also introduced registration of silicon imports originating in China, which management said could have an immediate impact on markets. The investigation is expected to conclude within 12 months. For ferrosilicon, the EU has extended anti-dumping duties on imports from China and Russia for another five years, with a general rate of 31.2% for Chinese producers and 22.7% for Russian producers.
Management noted that more than 75% of sales from Norway and Iceland go to the EU and said the measures could improve market conditions, although timing and magnitude are uncertain. Asked about the potential new rate on Chinese imports, the CEO declined to speculate, citing the US anti-dumping rate of 140% as an example of what is possible. For the fourth quarter, Elkem guided to a stable result for Elkem Silicon, with further price normalisation expected to strengthen the outlook for 2027.
Elkem Foundry Alloys is expected to deliver a stable result with seasonally lower sales towards year-end, and Elkem Carbon a modest improvement. At the Capital Markets Update, management presented a strategy summarised as protect, grow and explore, and revised financial targets. The long-term EBITDA margin target was raised to above 20% through the cycle, from 15-20% previously, with the company noting a six-year historical average of 22%.
Reinvestments are targeted at around 100% of depreciation and amortisation, equal to approximately NOK 900 million per year. The leverage target is net interest-bearing debt below 2.5x last twelve months EBITDA at all times, compared with 1-2x previously. The dividend target is 30-50% of EPS.
Management said cumulative dividends since the 2018-2019 IPO amount to almost NOK 8 billion, or NOK 12.7 per share, with an average dividend yield of 4.8%. In the Q&A, analysts questioned the payout ratio relative to peers and the scope for extra distributions; the CFO said the target was not carved in stone and that a strong year could bring further dividends. According to the presentations, Elkem Silicon represents around 55% of 2025 revenues and 33% of EBITDA, with materials contributing roughly 25% of Elkem Silicon's turnover in 2026.
Elkem Foundry Alloys, the company's global cast iron metal treatment business, serves more than 1,300 customers and has capacity of around 190,000 tons per year. Elkem Carbon, which supplies electrode paste and specialty carbon products, accounts for about 20% of revenue and has capacity of around 500,000 tons. The company said it has hedged around 85% of its Norwegian power exposure in the short to medium term.
Source: finance.yahoo.com