Elkem to optimise silicones production amid business challenges

Oslo – Elkem SA’s silicones division is set to adjust production and optimise its product-mix as the segment continued to underperform in the second quarter.

Over the three months to end of June, the division posted sales of NOK3.5 billion (€310 million), down 33% year-on-year, Elkem reported 14 July.

Year-to-date, sales were down by nearly 27% at NOK7.6 billion, according to the ChemChina-owned silicones manufacturer.

Oslo-based Elkem linked the year-on-year decline in revenues to a combination of lower sales prices and lower volumes.

At negative NOK347 million, segment earnings (EBITDA) came in substantially lower than NOK743 million reported the year before.

In addition to lower sales, Elkem said, the result was negatively impacted by a NOK100 million maintenance stop in China and a NOK70 million inventory write-down.

In response, Elkem is taking measures to counter the business challenges, including by organising ‘systematic improvement work along several dimensions’.

The focus, said Elkem, will be on fixed-cost reductions, capacity optimisation, increased waste recycling, leveraging of by-products, and Capex optimisation.

As for its full-year outlook, Elkem said that its silicones markets are expected to remain challenging.

Therefore, the company said it “plans to run at reduced capacity to optimise product mix.”