Oslo – Elkem Silicones was hit by weak market sentiment, particularly in China, in the fourth quarter of 2018.
Operating income for the three months to end of December 2018 was stuck at the prior-year levels at NOK6.2 billion (€637 million), the Norwegian silicones company announced 12 Feb.
The company attributed the flat results, in part to sales prices and volumes in China which were affected by 'lower demand and maintenance shutdowns.'
EBITDA (earnings) for the quarter amounted to NOK974 million, down from NOK1,078 million in the corresponding quarter last year.
“Weaker market conditions in China have resulted in lower sales prices and lower volumes for core silicone products,” explained Helge Aasen, CEO of Elkem ASA.
As a result, he added, Elkem subsidiary Xinghuo Silicones operated below full capacity rate in the quarter.
Elkem’s Yongdeng Silicon Materials also completed technical upgrades of two furnaces, which resulted in lower production and sales.
The higher average sales prices were offset by higher raw material costs and lower sales during the final quarter of last year.
Elkem raised new financing of NOK1,750 million in the Norwegian bond market and € 215 million in the German Schuldschein market during the fourth quarter.
The new loans have been used to refinance local bank debt in China.
For the first quarter 2019, Elkem expects weaker results mainly due to “temporary production curtailments.”
The company expects subsequent quarters in 2019 to improve based on expected higher sales volumes, price recovery and lower raw material costs.