ELKEM ASA Contents | |
Condensed consolidated statement of profit or loss (unaudited) | |
Condensed consolidated statement of comprehensive income (unaudited) | |
Condensed consolidated statement of financial position (unaudited) | 11 |
Condensed consolidated statement of cash flows (unaudited) | 12 |
Condensed consolidated statement of changes in equity (unaudited) | 13 |
Notes to the condensed consolidated financial statements | 14 |
Note 1 General information, basis for preparation and judgements, estimates and assumptions | 14 |
Note 2 Operating segments | 14 |
Note 3 Fixed assets, right-of-use assets, goodwill and intangible assets | 16 |
Note 4 Other items | 18 |
Note 5 Finance income and expenses | 18 |
Note 6 Interest-bearing assets and liabilities | 19 |
Note 7 Cash flow hedging | 19 |
Note 8 Number of shares | 20 |
Note 9 Change in presentation | 20 |
Appendix - Alternative performance measures (APMs) | 22 |
First quarter report 2024 | 2 | P a g e |
Highlights 1st quarter 2024
- Elkem's EBITDA was NOK 721 million in the first quarter 2024.
- The Silicones division has experienced weak market conditions, particularly before Chinese New Year. Weak demand for specialities.
- Silicon Products delivered better results compared to the previous quarters, gradually benefitting from higher commodity market prices.
- Carbon Solutions delivered another strong quarter, despite slow demand.
- Strong focus on improving core business, decision to exit Vianode investment.
Key figures
(NOK million, except where specified) | 1Q 2024 | 1Q 2023 | YTD 2024 | YTD 2023 | FY 2023 | |
Total operating income | 7,961 | 9,755 | 7,961 | 9,755 | 34,760 | |
EBITDA | 721 | 1,565 | 721 | 1,565 | 3,771 | |
EBITDA margin (%) | 9% | 16% | 9% | 16% | 11% | |
EBIT | (1) | 114 | 1,025 | 114 | 1,025 | 1,365 |
Profit (loss) for the period | (2) | -439 | 952 | -439 | 952 | 72 |
Earning per share (EPS) (NOK per share) | -0.69 | 1.50 | -0.69 | 1.50 | 0.11 | |
Equity ratio (%) | 49% | 53% | 49% | 53% | 48% | |
Net interest-bearing debt (NIBD) | 10,206 | 3,670 | 10,206 | 3,670 | 9,450 | |
Cash flow from operations | 759 | 637 | 759 | 637 | 3,027 | |
ROCE - annualised (%) | 1% | 13% | 1% | 13% | 4% |
- Operating prof it bef ore other items and hedge adjustments
- Owners of the parent's share of prof it (loss)
First quarter report 2024 | 3 | P a g e |
EBITDA improvement from modest levels
Elkem's EBITDA in the first quarter 2024 improved compared to the preceding two quarters despite challenging market conditions. Commodity sales prices have improved during the quarter, but demand is still weak. There are signs of demand recovery, but the uncertainty is still significant.
Elkem's total operating income for the first quarter 2024 was NOK 7,961 million, which was in line with the preceding quarters, but down 18% from the first quarter 2023. Earnings before interest, taxes, depreciation and amortisation (EBITDA) was NOK 721 million, which was up from the previous two quarters, but down from the first quarter 2023. Earnings per share (EPS) was
NOK -0.69 in the quarter, impacted by negative mark-to-market effects.
The result for the Silicones division was hampered by weak market conditions and Chinese seasonality. The division presented a negative EBITDA contribution in quarter, but there are signs that demand is picking up. The Silicon Products divisions delivered improved results compared to the preceding two quarters, benefitting from higher sales prices for silicon and ferrosilicon and continued strong performance from specialty segments. The Carbon Solutions division delivered another strong result, despite low sales volume.
The macro-economic sentiment has been challenging in 2023, characterised by high inflation, interest rate hikes, and geopolitical uncertainties. The global macro-economic outlook for 2024 is still modest.
To counter challenging market conditions, Elkem has introduced a comprehensive improvement programme. The target is to improve EBITDA by at least NOK 1.5 billion and to reduce capital expenditures by NOK 2.0 billion compared to 2023. The programme is well underway. In the first quarter Elkem realised EBITDA improvements of NOK 0.2 billion, with an estimated full- year effect for 2024 of NOK 0.8 billion. Elkem's capital expenditures in the first quarter was down to NOK 0.6 billion, providing a clear trajectory to reach target. In line with the plan to reduce capital expenditures, Elkem has decided to exit its investment in Vianode.
In the first quarter 2024, Elkem signed a new long-term power contract in Norway. The contract is for nine years and expire end of 2035. Elkem is well-positioned with long-term power contracts in Norway with around 80% of the electricity supply secured until end of 2027.
The group's equity as at 31 March 2024 amounted to NOK 24,743 million, which gave a ratio of equity to total assets of 49%. Net interest-bearing debt was NOK 10,206 million, which gave a ratio of net interest-bearing debt to EBITDA of 3.5x. Elkem had cash and cash equivalents of NOK 5,849 million as at 31 March 2024, and undrawn credit lines of more than NOK 6,000 million.
There have been signs of recovery in the first quarter, but the uncertainty is still significant. The demand for silicones in Europe and US show signs of picking up. There is improved demand also in China, but the price development is hampered by overcapacity. Elkem's expansion in China will come on stream in May, but the financial impact is limited in the second quarter. Silicon Products is expected to benefit from the commodity price increases for silicon and ferrosilicon seen in the first quarter. Stable conditions are expected for Carbon Solutions, with some signs of demand improvement in specific markets.
First quarter report 2024 | 4 | P a g e |
Financial review
Group results
KEY FIGURES | 1Q 2024 | 1Q 2023 | YTD 2024 | YTD 2023 | FY 2023 |
NOK million | |||||
Total operating income | 7,961 | 9,755 | 7,961 | 9,755 | 34,760 |
EBITDA | 721 | 1,565 | 721 | 1,565 | 3,771 |
EBIT | 114 | 1,025 | 114 | 1,025 | 1,365 |
Other items | -198 | 553 | -198 | 553 | 516 |
Net financial items | -38 | -109 | -38 | -109 | -668 |
Profit (loss) before income tax | -311 | 1,385 | -311 | 1,385 | 951 |
Tax | -103 | -403 | -103 | -403 | -781 |
Profit (loss) for the period | -414 | 983 | -414 | 983 | 170 |
Quarter and year to date
Elkem group had total operating income of NOK 7,961 million in 1Q-2024, which was down 18% from NOK 9,755 million in 1Q-2023. Lower operating income was mainly explained by lower sales prices and lower sales volume.
The group's EBITDA for 1Q-2024 was NOK 721 million, down 54% from NOK 1,565 million in the corresponding quarter last year. Lower EBITDA was mainly explained by lower sales prices for Silicon Products. The result for the Silicones division was weak in the first quarter impacted by generally weak market conditions and Chinese seasonality. The Carbon Solutions division delivered another strong result despite a lower sales volume in the quarter.
EBIT for 1Q-2024 was NOK 114 million, down from NOK 1,025 million in 1Q-2023.
Other items include fair value changes from commodity contracts, gains (losses) on embedded derivatives in power contracts, value changes from currency forward contracts and other income and expenses. Other items amounted to NOK -198 million in 1Q- 2024, mainly consisting of losses on power and currency derivatives NOK -217 million and restructuring expenses NOK -13 million, which was partly offset by currency gains on working capital items NOK 32 million.
Net financial items were NOK -38 million in 1Q-2024, compared to NOK -109 million in 1Q-2023. Net interest expenses amounted to NOK -186 million, which was an increase compared to NOK -97 million in the corresponding quarter last year, mainly explained by higher interest rates. Gains on foreign exchange amounted to NOK 153 million, compared to a loss of NOK -7 million in 1Q- 2023. The foreign exchange gains in 1Q-2024 were mainly explained by positive translation effects on group loans.
Other financial expenses amounted to NOK -5 million.
Profit before income tax was NOK -311 million in 1Q-2024 compared to NOK 1,385 million in 1Q-2023.
Tax expenses in the quarter was NOK -103 million, despite negative profit before tax, due to losses not being capitalised as deferred tax assets.
Profit for the period was NOK -414 million, compared to NOK 983 million in 1Q-2023. Owners of the parent's share of profit was NOK -439 million, which gave earnings per share (EPS) of NOK -0.69 in 1Q-2024.
Elkem has with effect from 1 January 2024 changed the presentation of grants related to income, the presentation of capitalised salary of own developed fixed and intangible assets, and the changes in inventories of finished goods and work in progress for the activity cost part. These changes are impacting other operating income and cost items. The result for 2023 has been restated. Please refer to note 9 for further details.
First quarter report 2024 | 5 | P a g e |
Cash flow
CASH FLOW FROM OPERATIONS | 1Q 2024 | 1Q 2023 | YTD 2024 | YTD 2023 | FY 2023 |
NOK million | |||||
EBIT | 114 | 1,025 | 114 | 1,025 | 1,365 |
Amortisation, depreciation and impairment | 607 | 540 | 607 | 540 | 2,406 |
Changes in working capital | 311 | -606 | 311 | -606 | 1,584 |
Reinvestments | -298 | -330 | -298 | -330 | -2,351 |
Equity accounted investments | 25 | 7 | 25 | 7 | 22 |
Cash flow from operations | 759 | 637 | 759 | 637 | 3,027 |
Other cash flow items | -1,478 | 934 | -1,478 | 934 | -6,044 |
Change in cash and cash equivalents | -720 | 1,571 | -720 | 1,571 | -3,017 |
Elkem's internal cash flow measure is defined and described in the APM appendix to the report.
Quarter and year to date
Cash flow from operations was NOK 759 million in 1Q-2024, compared to NOK 637 million in 1Q-2023. Improved cash flow from operations was mainly explained by working capital changes. The working capital was reduced by NOK 311 million in 1Q-2024, compared to an increase of NOK 606 million in the corresponding quarter last year. The reduction in working capital was mainly due to lower inventories and trade receivables.
Reinvestments were NOK -298 million in 1Q-2024, which amounted to 49% of depreciation and amortisation (D&A). Strategic investments were included in other cash flow items and amounted to NOK 318 million, down from NOK 761 million in 1Q-2023. The strategic investments were mainly related to the Silicones expansion and specialisation projects in China and France.
Other cash flow items also include repayment of a bond loan of NOK 646 million which matured in February 2024.
Change in cash and cash equivalents was NOK -720 million in 1Q-2024. Currency exchange differences were NOK 201 million. As at 31 March 2024, the total cash and cash equivalents amounted to NOK 5,849 million down from NOK 6,367 million as at 31 December 2023.
Financial position
FINANCIAL POSITION | YTD 2024 | YTD 2023 | FY 2023 | |
Total equity (NOK million) | 24,743 | 29,861 | 24,458 | |
Equity ratio (%) | 49% | 53% | 48% | |
EPS (NOK per share) | -0.69 | 1.50 | 0.11 | |
Net interest bearing debt (NOK million) | (1) | 10,206 | 3,670 | 9,450 |
Leverage ratio based on LTM EBITDA (ratio) | 3.5 | 0.3 | 2.5 |
- Excluding receivables from related parties, loans to external parties, accrued interest income and non-current other restricted deposits
Quarter and year to date
Elkem's equity as at 31 March 2024 was NOK 24,743 million, up NOK 285 million from 31 December 2023. The increase was mainly explained by currency translation differences recognised through other comprehensive income.
The equity ratio as at 31 March 2024 was 49%, in line with year-end 2023.
Net-interest bearing debt as at 31 March 2024 was NOK 10,206 million, which was an increase of NOK 756 million from 31 December 2023. The increase was partly explained by currency translation effects. The leverage ratio was 3.5x as at 31 March 2024.
First quarter report 2024 | 6 | P a g e |
Segments
Silicones
KEY FIGURES | 1Q 2024 | 1Q 2023 | YTD 2024 | YTD 2023 | FY 2023 |
MNOK except where indicated otherwise | |||||
Total operating income | 3,349 | 4,160 | 3,349 | 4,160 | 14,163 |
EBITDA | -103 | -30 | -103 | -30 | -605 |
EBITDA margin | -3% | -1% | -3% | -1% | -4% |
Sales volume (thousand mt) | 79 | 99 | 79 | 99 | 332 |
Quarter and year to date
The Silicones division had total operating income of NOK 3,349 million in 1Q-2024 down 19% from NOK 4,160 million in 1Q-2023. Lower operating income was mainly explained by lower sales prices and lower sales volume.
EBITDA for 1Q-2024 was NOK -103 million, down NOK 73 million from the first quarter last year. Lower EBITDA was explained by lower sales prices in China and lower sales volume. This was partly countered by lower operating costs. The reduced production in France and China have negatively impacted the average product cost.
The sales volume was down from first quarter last year, due to weak markets and reduced production.
Silicon Products
KEY FIGURES | 1Q 2024 | 1Q 2023 | YTD 2024 | YTD 2023 | FY 2023 | |
MNOK except where indicated otherwise | ||||||
Total operating income | 4,015 | 4,988 | 4,015 | 4,988 | 17,836 | |
EBITDA | 677 | 1,257 | 677 | 1,257 | 3,304 | |
EBITDA margin | 17% | 25% | 17% | 25% | 19% | |
Sales volume (thousand mt) | 1) | 117 | 120 | 117 | 120 | 462 |
1) Excluding Microsilica and quartz |
Quarter and year to date
Silicon Products had total operating income of NOK 4,015 million in 1Q-2024, which was down 20% from NOK 4,988 million in 1Q-2023. Lower operating income was mainly explained by lower sales prices.
The EBITDA for Silicon Products was NOK 677 million in 1Q-2024, down 46% from the first quarter last year. The reduction in EBITDA was mainly explained by lower sales prices, partly offset by lower costs. The performance from the speciality segments continued to be strong. The EBITDA was positively impacted by insurance compensation for Elkem Salten, which will be gradually recognised using conservative assumptions.
The sales volume was negatively impacted by weak demand from silicones, aluminium, and steel markets.
Carbon Solutions
KEY FIGURES | 1Q 2024 | 1Q 2023 | YTD 2024 | YTD 2023 | FY 2023 |
MNOK except where indicated otherwise | |||||
Total operating income | 834 | 1,112 | 834 | 1,112 | 4,210 |
EBITDA | 249 | 374 | 249 | 374 | 1,010 |
EBITDA margin | 30% | 34% | 30% | 34% | 24% |
Sales volume (thousand mt ) | 64 | 72 | 64 | 72 | 279 |
Quarter and year to date
Carbon Solutions reported total operating income of NOK 834 million in 1Q-2024, down 25% from NOK 1,112 million in 1Q-2023. Lower operating income was explained by lower sales volume and lower sales prices.
The EBITDA for 1Q-2024 amounted to NOK 249 million, down 33% from NOK 374 million in the corresponding quarter last year. The reduction in EBITDA was mainly explained by lower sales volume and lower sales prices. This has been partly offset by lower raw material costs.
The sales volume was down compared to first quarter last year, mainly due to weak ferroalloys market.
First quarter report 2024 | 7 | P a g e |
Outlook for the second quarter 2024
There have been signs of recovery in the first quarter, but the uncertainty is still significant. The demand for silicones in Europe and US show signs of picking up. There is improved demand also in China, but the price development is hampered by overcapacity. Elkem's expansion in China will come on stream in May, but the financial impact is limited in the second quarter. Silicon Products is expected to benefit from the commodity price increases for silicon and ferrosilicon seen in the first quarter. Stable conditions are expected for Carbon Solutions, with some signs of demand improvement in specific markets.
First quarter report 2024 | 8 | P a g e |
Interim financial statements
Condensed consolidated statement of profit or loss (unaudited)
First quarter | Year to date | Year | ||||||
Amounts in NOK million | Note | 2024 | 1) | 2024 | 1) | 1) | ||
2023 | 2023 | 2023 | ||||||
Revenue | 2 | 7,749 | 9,654 | 7,749 | 9,654 | 34,364 | ||
Other operating income | 2 | 221 | 78 | 221 | 78 | 350 | ||
Share of profit(loss) from equity accounted investments | 2 | (9) | 24 | (9) | 24 | 46 | ||
Total operating income | 7,961 | 9,755 | 7,961 | 9,755 | 34,760 | |||
Raw materials and energy for production | (4,358) | (5,256) | (4,358) | (5,256) | (19,441) | |||
Employee benefit expenses | (1,342) | (1,309) | (1,342) | (1,309) | (5,074) | |||
Other operating expenses | (1,586) | (1,683) | (1,586) | (1,683) | (6,673) | |||
Amortisation and depreciation | 3 | (606) | (538) | (606) | (538) | (2,312) | ||
Impairment loss | 3 | (1) | (2) | (1) | (2) | (94) | ||
Other items | 4 | (198) | 553 | (198) | 553 | 516 | ||
Operating profit (loss) | (130) | 1,518 | (130) | 1,518 | 1,682 | |||
Share of profit(loss) from equity accounted financial investment | (143) | (24) | (143) | (24) | (63) | |||
Finance Income | 5 | 32 | 44 | 32 | 44 | 182 | ||
Foreign exchange gains (losses) | 5 | 153 | (7) | 153 | (7) | (106) | ||
Finance expenses | 5 | (222) | (146) | (222) | (146) | (743) | ||
Profit (loss) before income tax | (311) | 1,385 | (311) | 1,385 | 951 | |||
Income tax (expenses) benefits | (103) | (403) | (103) | (403) | (781) | |||
Profit (loss) for the period | (414) | 983 | (414) | 983 | 170 | |||
Attributable to: | ||||||||
Non-controlling interests' share of profit (loss) | 25 | 30 | 25 | 30 | 98 | |||
Owners of the parent's share of profit (loss) | (439) | 952 | (439) | 952 | 72 | |||
1) | See note 9 Change in presentation | |||||||
First quarter | Year to date | Year | ||||||
Earnings per share | 2024 | 2023 | 2024 | 2023 | 2023 | |||
Basic earnings per share in NOK | (0.69) | 1.50 | - | 0.69 | 1.50 | 0.11 | ||
Diluted earnings per share in NOK | (0.69) | 1.49 | - | 0.69 | 1.49 | 0.11 | ||
Weighted average number of outstanding shares (million) | 12 | 634 | 635 | 634 | 635 | 635 | ||
Weighted average number of outstanding shares diluted (million) | 12 | 634 | 637 | 634 | 637 | 636 |
First quarter report 2024 | 9 | P a g e |
Condensed consolidated statement of comprehensive income (unaudited)
First quarter | Year to date | Year | |||
Amounts in NOK million | 2024 | 2023 | 2024 | 2023 | 2023 |
Profit (loss) for the period | (414) | 983 | (414) | 983 | 170 |
Remeasurement of defined benefit pension plans | - | - | - | - | (19) |
Tax effects on remeasurements of defined benefit pension plans | - | - | - | - | 4 |
Changes in fair value of equity instruments | - | 0 | - | 0 | 3 |
Total items that will not be reclassified to profit or loss | 0 | 0 | 0 | 0 | (12) |
Currency translation differences | 858 | 1,270 | 858 | 1,270 | 476 |
Hedging of net investment in foreign operations | (106) | (242) | (106) | (242) | (199) |
Tax effects hedging of net investment in foreign operations | 23 | 53 | 23 | 53 | 44 |
Cash flow hedges | (110) | (1,280) | (110) | (1,280) | (1,125) |
Tax effects on cash flow hedges | 24 | 281 | 24 | 281 | 247 |
Share of other comprehensive income (loss) from equity accounted investments | 7 | 6 | 7 | 6 | 3 |
Total items that may be reclassified to profit or loss | 697 | 88 | 697 | 88 | (554) |
Other comprehensive income, net of tax | 697 | 88 | 697 | 88 | (566) |
Total comprehensive income | 283 | 1,071 | 283 | 1,071 | (396) |
Attributable to: | |||||
Non-controlling interests' share of comprehensive income | 31 | 37 | 31 | 37 | 102 |
Owners of the parent's share of comprehensive income | 252 | 1,034 | 252 | 1,034 | (498) |
Total comprehensive income | 283 | 1,071 | 283 | 1,071 | (396) |
First quarter report 2024 | 10 | P a g e |
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Elkem ASA published this content on 18 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 April 2024 06:24:02 UTC.
