Elkem Q2 2025: Key Takeaways

Q2 underwhelms, but revaluation drivers remain intact

We added Elkem to the Gullinbursti Dividend Portfolio on 30 May at NOK 19.66, driven by what we saw as a highly asymmetric setup: a potential NOK 10bn divestment of the Silicones division that could unlock a NOK 4bn cash return, with the remaining business trading at 0.6x P/B and below 9x forward P/E. In the weeks that followed, Elkem did its part, rising nearly 30% to peak at NOK 25.50. On Friday, however, the Q2 results brought the rally to a halt. The stock dropped 8.3% to NOK 22.60, as investors digested weak silicon markets and a cautious outlook. Still, the structural bull case remains intact. Below we break down the main highlights from the call with CEO Helge Aasen and CFO Morten Viga.

Index

1. Strategic Review of Silicones

2. Market Conditions and Price Pressure

3. Segment Performance: Silicon Products, Carbon Solutions, Silicones

4. Operational Leverage and Energy Hedging

5. Strategic Positioning in Growth Sectors

6. Outlook and Trade Policy Tailwinds

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1. Strategic Review of Silicones

Elkem confirmed that the strategic review of the Silicones division is ongoing and aims to conclude before year-end, with a status update to be provided during Q3. As of Q2, the division is reclassified as discontinued operations and assets held for sale.

“The strategic review to streamline the Elkem business portfolio is ongoing and progressing. We will provide a more detailed status update in the third quarter.” – CEO Helge Aasen

Silicones' performance improved significantly YoY and sequentially, with Q2 EBITDA up 449% YoY to NOK 247 million, helped by cost improvements in China and France.

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2. Market Conditions and Price Pressure

Elkem reported continued downward pressure on prices across silicon, ferrosilicon, and silicones, particularly due to Chinese overcapacity and aggressive exports to the EU.

“Silicon prices in both EU and China have been declining… prices are now down to an unsustainable level.” – CEO Helge Aasen

The company flagged an ongoing EU safeguard investigation into imports of silicon and ferrosilicon, which could support prices if measures are implemented in Q3.

Silicones also saw historic lows in China (DMC at 10,400 CNY/ton), but Elkem noted volume growth in Asia-Pacific and stability in specialties.

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3. Segment Performance