A message from our CEO

The world experienced a public health crisis and an economic crisis in 2020. Elkem has met these challenges well, by focusing on three priorities: Putting health and safety first, maintaining high and stable production while positioning for profitable growth. We remain optimistic regarding the longer-term global trends that will drive demand for our products.

The coronavirus pandemic (Covid-19) has dominated the year 2020. The disease was first identified in China in December 2019 and was declared a pandemic in March 2020. With more than 3,000 employees in China, Elkem was exposed early on to the potential spread of the disease. However, it was at our head office in Oslo, Norway, where we faced our first confirmed case on 6 March.

Elkem established a corporate task force to coordinate our global coronavirus response. Our primary focus remained on health and safety, in line with Elkem’s zero-harm philosophy. By the end of the year, Elkem has registered 110 confirmed cases among our more than 6,800 employees. We are pleased that all have recovered and are doing well.

Covid-19 also dominated the macroeconomic conditions in 2020. While China has seen an economic slowdown in the first quarter of 2020 the rest of the world was hard hit in Q2 and Q3. Because of our diversified global footprint and decentralised operating model Elkem has dealt with these challenges remarkably well. We have been able to maintain our production mainly in line with normal capacity.

Our financial results have been negatively impacted. The impact was most significant in the first three quarters, starting in China and then in Europe and the Americas as the pandemic continued its spread. The fourth quarter results were less impacted, as we saw a clear recovery in China and improvements also in Europe and the Americas. Towards the end of the year, we continued to experience good demand for Elkem’s solutions – even though uncertainty remained high.

However, Elkem has done much more than dealing with the coronavirus crisis. We have used 2020 to lay a solid foundation for profitable growth and increased market share in the years to come. There will come a stage after the pandemic, where focus turns to rebuilding societies and build the post-coronavirus economy, better and more sustainable for all. We are set up to benefit from this.

We believe that long-term megatrends – like sustainability, energy demand, urbanisation, increased standard of living, ageing and growing population, and digitalisation – will continue. This will drive growth in demand for advanced materials, including silicones, silicon and carbon solutions. Our vision remains to provide advanced material solutions shaping the future. And we have a clear corporate strategy to strengthen our competitive positions through specialisation and growth.

Continued productivity improvement is key to enable profitable growth. Even before the impact of Covid-19, we had started preparing a new productivity improvement programme to improve the company's cost position and streamline the organisation. As announced in March, Elkem has identified a potential of more than NOK 350 million in annual improvements.

In May, we streamlined our corporate structure from four to three business divisions, to accelerate specialisation and further improve operational excellence. This also enables further cost reductions.

Silicones is Elkem’s largest business division, but a challenger in most of its segments worldwide. It is focusing on profitable growth and increased market shares, particularly in China, while also improving underlying profitability through operational excellence and specialisation. In April, Elkem completed the acquisition of Polysil, a leading Chinese silicone elastomer and resins material manufacturer. In December, we completed and opened a new production workshop in Shanghai, China, dedicated to specialised silicones for hybrid and electric vehicles.

The Silicon Products division represents Elkem’s strong heritage. It has solid market positions globally and defended its positions well in 2020, while running at high capacity. It will continue focusing on improved profitability through operational excellence, while selectively pursuing growth.

The Carbon Solutions division is a strong and highly profitable market leader in its segments. It has managed to maintain strong profitability in 2020 despite a difficult market. It will focus on maintaining its strong positions through operational excellence, while selectively pursuing growth.

This corporate strategy is supported by three initiatives:

  • We established a Digital Office in 2020 to drive a digital transformation across the company. We believe that digital technologies can disrupt industries, and we aim to be one of the winners.
  • ESG is increasingly important among our stakeholders – and Elkem needs a strong ESG profile and performance in order to meet expectations as we position for the future. In November, Elkem received a Gold sustainability rating from EcoVadis. In December, we received an A rating from CDP, ranking among the world’s leading companies on climate transparency and action.
  • Finally, we are focusing even more on our people: Optimising our organisation, developing good leadership and improving our performance on diversity.

Elkem is also actively using its competence to develop new sustainable business areas. Elkem will search for partners to these projects, but they clearly demonstrate Elkem’s capability to drive development of new green technologies:

  • Battery Materials is a unique growth opportunity based on graphite and silicon. Elkem is developing a pilot plant for battery graphite to be opened in early 2021. In August, Elkem selected Herøya Industrial Park in Norway as the site for a potential large-scale plant.
  • Biocarbon is a potential breakthrough technology for carbon neutral metals. In September, Elkem decided to invest in a new biocarbon pilot plant in Canada.
  • Energy recovery represents circular solutions for lower emissions and higher efficiency. Elkem expects to open a new energy recovery plant at Salten in Norway in 2021.

In short, we have used a difficult year well, meeting the challenges while positioning for growth. This goes hand in hand with Elkem’s mission: To contribute to a sustainable future by providing advanced silicon, silicones and carbon solutions, adding value to our stakeholders.

In 2020 the Elkem team has demonstrated its strength in very difficult times and I am very proud to be part of it!

Thank you for your strong efforts throughout the year and for performing in a very challenging environment. We have all the ingredients in place to make 2021 a successful year for Elkem, while remaining mindful of the unusually high uncertainty in our external environment.

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Michael Koenig CEO, Elkem ASA