OSLO, Norway—Elkem S.A. has reported a flat second quarter despite slow demand and the challenges posed by the COVID-19 pandemic.
Earnings fell slightly—0.4 percent year-over-year—to $70.5 million on 2 percent higher sales of $635 million during the second quarter, the Chinese-owned Norwegian materials supplier reported July 17.
"COVID-19 continues to impact global markets with negative effects on demand and sales prices. Despite these challenging market conditions, Elkem achieved strong sales volumes and stable results in the second quarter," Elkem CEO Michael Koenig said in a statement. "This reflects Elkem's strong competitive position."
The company linked the above-average performance to "high capacity utilization, strong operational performance and good market and cost positions."
The silicones division, which represents more than half of overall sales, posted an 11 percent increase in revenue at $340 million for the quarter.
Higher income was mainly attributed to higher sales volumes and the consolidation of China-based Polysil from April 1.
Segment earnings for the quarter fell 35 percent to $23.8 million, mainly due to lower sales prices in China. In addition, earnings were negatively impacted by lower sales of specialty products due to weak markets, particularly automotive.
Over the first six months, the division reported a 46 percent decline in earnings at $84 million, on flat sales of $613 million.
Results were impacted by lower sales prices largely explained by negative market developments caused by COVID-19.
Elkem noted the pandemic continues to impact global markets, demand and sales prices. However, it said, the market development in China is showing signs of recovery.
Going forward, Elkem expects the markets to continue to be characterized by low visibility due to COVID-19.
According to the company, silicones demand in China is "good, driven by government incentives, but sales prices may be volatile."
Demand for silicones outside of China is weak, which is negatively impacting the sales of specialty products.