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1. Company Snapshot

1.a. Company Description

Elkem ASA manufactures and sells metals and materials in Norway, the United Kingdom, Germany, France, Italy, Poland, Spain, the Netherlands, and othe European countries.It operates through three segments: Silicones, Silicon Products, and Carbon Solutions.The Silicones segment produces and sells various silicone-based products across various sub-sectors, including release coatings, engineering elastomers, healthcare products, specialty fluids, emulsions, and resins.


The Silicon Products segment produces various grades of metallurgical silicon, ferrosilicon, foundry alloys, and micro silica for use in various end applications.The Carbon Solutions segment produces carbon electrode materials, lining materials, and specialty carbon products for metallurgical processes to produce various metals.Elkem ASA also engages in the generation and sale of hydroelectric power, as well as supplies heat in the form of steam and hot water.


The company was incorporated in 1904 and is headquartered in Oslo, Norway.Elkem ASA is a subsidiary of Bluestar Elkem International Co., Ltd.S.A.

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1.b. Last Insights on ELK

Elkem ASA's recent performance was driven by a proposed cash dividend of NOK 0.30 per share, indicating a commitment to returning value to shareholders. The company has also initiated a strategic review of its Silicones division, aiming to streamline operations and allocate capital to accelerate growth in other divisions. Additionally, Scope has put Elkem's BBB- issuer rating under review for a possible upgrade, reflecting the company's creditworthiness. The upcoming annual general meeting on April 30, 2025, will provide further insight into Elkem's strategy and direction.

1.c. Company Highlights

2. Elkem's Q4 Results: A Resilient Performance Amidst Challenging Market Conditions

Elkem's fourth-quarter financial performance was marked by an operating income of NOK 7.3 billion, down 14% from the same period last year. The EBITDA for the quarter was NOK 890 million, with a reported group EBITDA margin of 12%. The company's earnings per share (EPS) for the quarter was negative at NOK 0.21, bringing the year-to-date EPS to minus NOK 1.05. However, excluding the Silicones division, Elkem's EPS for the full year would have been NOK 0.61 per share, indicating a more resilient underlying performance. The actual EPS came out at -0.27881, missing estimates at -0.03755.

Publication Date: Mar -05

📋 Highlights
  • Sale of Silicones Division: Elkem sold majority of Silicones to Bluestar, reducing equity and debt, enabling capital allocation focus, with a pro forma leverage of 3.6x post NOK 1.5 billion equity raise.
  • Q4 EBITDA Performance: Reported NOK 890 million EBITDA (12% group margin), with operating income of NOK 7.3 billion, down 14% YoY, but excluding Silicones, full-year EPS would have been NOK 0.61.
  • Margin Resilience: Maintained near-full capacity utilization despite market headwinds; cost improvements (raw materials, operational) offset low demand and price declines in Silicon Products and Carbon Solutions.
  • Trade Barrier Benefits: EU safeguard measures and U.S. tariffs boosted ferrosilicon prices by 20%, securing Elkem advantageous country-specific quotas, expected to drive further price increases in 2026.
  • Future Growth Outlook: Targets >10% top-line growth in 2026 driven by volume/mix improvements, aiming for 24% EBITDA margin (2018–2025 average), with focus on organic growth and M&A post-transaction closure by late April/early May.

Financial Highlights

The company's financial numbers and ratios reveal a mixed picture. Elkem's total equity stands at NOK 24 billion, with an equity ratio of 51%. The net interest-bearing debt is NOK 11.9 billion, with a debt leverage ratio of 3.5x. The company's balance sheet remains solid, but the sale of the Silicones division to Bluestar will impact Elkem's equity and debt. As CEO Helge Aasen noted, "the transaction will be settled through the redemption of Bluestar's shares in Elkem, and no cash payments will be made by Elkem or Bluestar."

Operational Performance

Despite challenging market conditions, Elkem maintained close to full capacity utilization. The company's Silicon Products segment was impacted by lower sales prices, while Carbon Solutions was affected by lower sales and idling of steel and ferroalloy capacity. However, Silicones delivered further profitability improvements, mainly due to higher sales prices in Asia Pacific and cost improvements.

Valuation and Outlook

Elkem's valuation metrics indicate a mixed picture. The company's P/E Ratio is -28.96, while the P/B Ratio is 0.81. The EV/EBITDA ratio is 8.42, indicating a relatively reasonable valuation. Analysts estimate next year's revenue growth at 7.4%. With the sale of the Silicones division, Elkem expects to benefit from increased focus on supply chains and the secure supply of critical materials. The company anticipates an underlying top-line growth of more than 10% in 2026 compared to 2025, driven by a better mix and higher volumes.

Conclusion on Future Prospects

The sale of the Silicones division is expected to improve Elkem's capital allocation, enabling the company to accelerate organic growth and pursue M&A opportunities. The new Elkem will have a global business model with 18 main production sites, delivering an average EBITDA margin of 24% from 2018 to 2025. With a stronger and more profitable portfolio, Elkem is well-positioned for future growth, and its target is to maintain a robust financial profile over the cycle with a strong focus on solid cash conversion.

3. NewsRoom

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Assessing Elkem (OB:ELK) Valuation After A Recent Short Term Share Price Rebound

Feb -17

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Elkem ASA (ELKEF) Q4 2025 Earnings Call Highlights: Strategic Divestment and Resilient ...

Feb -13

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Clarification regarding the conditional underwritten equity issue in Elkem

Feb -13

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Elkem ASA - Notice of extraordinary general meeting

Feb -13

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Elkem announces agreement to sell majority of Silicones division to Bluestar

Feb -13

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Elkem: Fourth quarter 2025 - Impact of weak markets mitigated by cost improvements, sales agreement entered for Silicones division

Feb -13

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Elkem introduces new biocompatible, electro conductive SILBIONE™ Liquid Silicone Rubber for advanced healthcare devices

Oct -23

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Elkem: Third quarter 2025 - Results supported by strong operational performance and cost improvements

Oct -23

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.37%)

6. Segments

Silicon Products

Expected Growth: 8%

Elkem ASA's Silicon Products segment growth is driven by increasing demand for solar panels and electric vehicles, which rely on silicon-based materials. Additionally, the growing need for energy-efficient solutions and renewable energy sources contributes to the segment's growth. Furthermore, Elkem's strategic expansion into the Chinese market and investments in production capacity also support the segment's 8% growth.

Silicones

Expected Growth: 7%

Elkem ASA's Silicones segment growth is driven by increasing demand for sustainable and eco-friendly products, growth in the renewable energy sector, and rising adoption in the automotive and construction industries. Additionally, the company's strategic expansion into new markets and investments in R&D have contributed to its 7% growth.

Carbon Solutions

Expected Growth: 6%

Elkem ASA's Carbon Solutions segment growth is driven by increasing demand for sustainable materials, government incentives for carbon reduction, and growing adoption of electric vehicles. Additionally, Elkem's expansion into new markets, investments in R&D, and strategic partnerships contribute to its 6% growth rate.

Other

Expected Growth: 5%

Elkem ASA's 'Other' segment growth is driven by increasing demand for specialized foundry products, growth in the global silicones market, and expansion into new markets. Additionally, the company's focus on sustainability and energy efficiency, as well as its strategic partnerships and acquisitions, contribute to its growth.

7. Detailed Products

Silicones

Elkem's silicones are used in a wide range of applications, including construction, electronics, and personal care. They offer a variety of silicone products, including silicone fluids, emulsions, and resins.

Silicon Metals

Elkem's silicon metals are used in the production of aluminum, steel, and other metals. They offer a range of silicon metal products, including silicon metal alloys and silicon metal powder.

Foundry Products

Elkem's foundry products are used in the production of iron and steel castings. They offer a range of foundry products, including ferrosilicon, silicon metal, and inoculants.

Microsilica

Elkem's microsilica is a by-product of silicon metal production and is used as a supplementary cementitious material in concrete.

Carbon Products

Elkem's carbon products are used in the production of aluminum, steel, and other metals. They offer a range of carbon products, including electrodes, cathodes, and recarburizers.

8. Elkem ASA's Porter Forces

Forces Ranking

Threat Of Substitutes

Elkem ASA operates in the silicones and specialty materials industry, which has a moderate threat of substitutes. While there are some substitutes available, they are not perfect and have their own limitations.

Bargaining Power Of Customers

Elkem ASA has a diverse customer base, and no single customer accounts for a significant portion of its revenue. This reduces the bargaining power of customers.

Bargaining Power Of Suppliers

Elkem ASA relies on a few key suppliers for raw materials, which gives them some bargaining power. However, the company's size and scale of operations also give it some negotiating power.

Threat Of New Entrants

The silicones and specialty materials industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to join the market.

Intensity Of Rivalry

The silicones and specialty materials industry is highly competitive, with several established players competing for market share. Elkem ASA faces intense competition from companies like Dow, Wacker Chemie, and Shin-Etsu.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 39.25%
Debt Cost 11.18%
Equity Weight 60.75%
Equity Cost 11.18%
WACC 11.18%
Leverage 64.60%

11. Quality Control: Elkem ASA passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Elkem

A-Score: 5.3/10

Value: 8.8

Growth: 2.6

Quality: 3.0

Yield: 5.6

Momentum: 8.5

Volatility: 3.3

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Victrex

A-Score: 4.6/10

Value: 5.2

Growth: 2.2

Quality: 6.4

Yield: 8.1

Momentum: 1.0

Volatility: 4.7

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Stock-Card
Elementis

A-Score: 4.1/10

Value: 5.0

Growth: 1.7

Quality: 3.8

Yield: 1.2

Momentum: 6.5

Volatility: 6.7

1-Year Total Return ->

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Zotefoams

A-Score: 4.1/10

Value: 4.0

Growth: 5.4

Quality: 3.8

Yield: 3.8

Momentum: 6.5

Volatility: 1.0

1-Year Total Return ->

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Stock-Card
Essentra

A-Score: 3.6/10

Value: 4.4

Growth: 1.3

Quality: 3.9

Yield: 6.2

Momentum: 1.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
LANXESS

A-Score: 2.9/10

Value: 8.4

Growth: 1.4

Quality: 1.7

Yield: 2.5

Momentum: 1.0

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

29.28$

Current Price

29.28$

Potential

-0.00%

Expected Cash-Flows