The industrial giant may point to higher revenues, but the markets in Europe and America were still weak and Elkem’s profit turned into a loss in the quarter.
Elkem reports that the construction and car markets in China are improving. In Europe and America, however, markets are still weak due to the corona situation.
– Elkem had strong sales in the third quarter, and all divisions reported higher volumes compared with the corresponding quarter last year. However, the result was negatively affected by weak market conditions due to covid-19, says CEO Michael Koenig in a press release.
Elkem will build pilot plants for biocarbon in Canada
Elkem achieved a profit before tax of minus NOK 74 million in the third quarter, down from NOK 282 million at the same time last year, the quarterly report shows on Tuesday.
The industrial group reports operating revenues of NOK 5.89 billion, up from NOK 5.54 billion in the third quarter last year.
At the same time, the operating profit fell to 82 from NOK 317 million.
Analysts who follow Elkem had on average expected a profit before tax of NOK 92 million in the third quarter, from revenues of NOK 5.62 billion, according to Infront / TDN Direkt.
Major investment in battery materials: Elkem will build a new factory in Porsgrunn
The weak markets have affected sales of special products, writes Elkem, which points to lower sales prices and lower sales in the areas «Silicones» and «Silicon Products».
At the same time, the area for carbon solutions had a strong quarter, with better results despite a challenging market, the group reports
Elkem is a large producer of silicon and also produces silicone in many forms for various industrial uses. The group supplies products to a number of different industries, including the automotive industry, aviation and the construction industry.
Elkem is in the process of a cost program with a goal of an annual saving of more than NOK 350 million, and by the end of the quarter had reached 147 million.
During the third quarter, Elkem launched several initiatives. The group wants to build a new factory in the billion class in Porsgrunn that will produce battery materials that can be used in electric vehicles, and the final investment decision will be made in 2021.
Elkem has also decided to build a pilot plant for biocarbon in Quebec, Canada with a price tag of NOK 180 million, which will be located next to existing factory facilities in the area.
Elkem is controlled by Chinese Bluestar, and returned in 2018 to the Oslo Stock Exchange after a few years’ absence. Elkem is a major player in the Chinese silicone industry and also has facilities in Europe and Norway.