Elkem's Second Act: A Smaller, Sharper Silicon Producer Bets on Europe's Trade Walls
A new CEO, new targets and a portfolio stripped to three divisions — but the commodity cycle still holds the pen.
ELK.OL · Earnings Call · 2026-10-29
A Smaller Elkem, A Bigger Claim
Dag Teigland's first quarterly call as CEO was really a coming-out party for a different company. The silicones business is gone to Bluestar, the old Silicon Products division has been split into Elkem Silicon and Foundry Alloys, and Elkem Carbon now sits alongside them. The balance sheet has been recapitalized — NOK 1.8bn of new equity, EUR 1bn of bank facilities refinanced — and the cost program has taken out close to 400 full-time positions, more than the 300 originally promised, for expected annual savings above NOK 600m. Teigland's summary: “2026 has been a year of decisive change for Elkem” — Dag Teigland, CEO · 2026-10-29 and “the major structural changes are behind us” — Dag Teigland, CEO · 2026-10-29. That is the pitch. The Q3 numbers are the reality check: operating income of NOK 3.6bn, down 2%, EBITDA of NOK 554m, down 14%, a 15% margin. The gap between the new story and the old commodity cycle is the whole investment debate.The cost cuts were supposed to show up in Q3. On the July call, CFO Morten Viga said investors “should basically now start to see the major part of that from Q3” — Morten Viga, CFO · 2026-07-10. On this call he cautioned that Q3 was “a bit of an extraordinary quarter as it is a vacation season” — Morten Viga, CFO · 2026-10-29, so the benefit lands in Q4. That is plausible, but it is also the second consecutive quarter in which the cost tailwind has been deferred. The new financial targets assume the cost program works and the market cooperates: EBITDA margin above 20% through the cycle, net debt below 2.5x EBITDA, reinvestment around 100% of D&A, and a 30-50% dividend payout.
The Commodity Still Holds the Pen
The specialty divisions are doing their job. Foundry Alloys grew EBITDA 7% to NOK 235m on positive volume and mix, and Carbon delivered NOK 183m despite a 21% decline, with management pointing to steel-demand weakness and fixed-cost dilution. But Elkem Silicon is still the swing factor: revenue fell 9% and EBITDA fell 43% to NOK 127m. The reason is the index price for silicon and ferrosilicon. Viga was blunt: “today's prices are extremely low... in real terms, we are at all-time low prices” — Morten Viga, CFO · 2026-10-29. Silicon prices have ticked up modestly in Q3 and early Q4, but not enough to move Q4 numbers because of lag effects. The silicon prices recovery is the upside case; without it, the >20% margin target is arithmetic fiction.The balance sheet is better but not fixed. Leverage is 3.3x, down from 4.3x in Q1, and cash of NOK 5.5bn covers all maturities until 2029. After the February equity raise, Viga guided to “approximately 3.6x EBITDA on a leverage” — Morten Viga, CFO · 2026-02-13; the Q3 print is 3.3x, so the direction is right. Still, Viga called deleveraging “a key priority going forward” — Morten Viga, CFO · 2026-10-29. The company also has a hidden asset: 1.3m free EU emission allowances received in September, carried at zero, with an estimated fair value around NOK 1.2bn, to be sold over time. That is real liquidity, but it is one-time-ish and does not change the operating story. On Iceland, a new 127 MW power contract through 2029 improves the plant's strategic attractiveness, but the strategic review continues. On the prior call, management said a data center was not an option; now Teigland says the power gives flexibility for the ferrosilicon plant, “maybe for a data center or maybe for something else” — Dag Teigland, CEO · 2026-10-29. That is a small but telling shift in optionality.
The Trade-Defense Bet
The most important non-financial claim on the call is that Europe has finally moved from talk to action on protecting its industrial supply chains. Teigland's line:. The evidence is concrete: the European Commission opened an interim review of anti-dumping duties on Chinese silicon, and on October 23 it began registering Chinese silicon imports, which could allow retroactive duties. Ferrosilicon duties on China and Russia were extended for five years. CBAM starts in January 2026, and new steel safeguards are meant to lift European steel output. This is part of a broader trade defense mechanisms wave — steel producers across the global reporter set were talking about the same thing this quarter. For Elkem, the prize is that more than 75% of Norwegian and Icelandic silicon sales go to the EU, and silicon is classified as a critical material in both Europe and the US. The company is trying to position itself as a Western value chain supplier with a low cost position and renewable energy power contracts.the tide is turning, or I would say the tide has turned
But the analyst pushback was sharp. Nils Foldal of Manara pointed out that Norway is not in the EU and that Elkem's Canadian plant sits inside a trade war. Teigland conceded: “I agree. So that is a risk factor.” — Dag Teigland, CEO · 2026-10-29 He then argued Norway supplies about 40% of the EU's silicon requirement, so Brussels cannot easily ignore it. That may be true, but it is a political argument, not a contractual one. The market is being asked to underwrite a policy call before it shows up in orders.