Good morning, and welcome to the third quarter results presentation for Elkem, and also the capital markets update. My name is Odd-Geir Lyngstad, and I am responsible for investor relations. Today's event will be split into two sections. First, we will start with the third quarter results presentation, and then we will continue with the capital markets update. We will have one Q&A session after the third quarter presentation, and then one after the capital markets update. To take us through today's presentations and start with the third quarter presentation, we have CEO Dag Teigland and CFO Morten Viga. For the capital markets update, we will also be joined by the Senior Vice Presidents for each of the three divisions. We have Luiz Simão representing Elkem Silicon, Inge Grubben-Strømnes from Elkem Foundry Alloys, and Izaias Entringer from Elkem Carbon. They will be introduced in more detail later.
Let's move on to the agenda items for the third quarter presentation. As usual, we will go through the highlights for the quarter and give a business update. This will be followed by a market update and the outlook for the fourth quarter. CEO Dag Teigland will take us through these agenda items. CFO Morten Viga will then take us through the third quarter results. As mentioned, we will open for Q&A after Dag and Morten's presentations. We plan to continue with the third quarter presentation until around 9:45 A.M., and we will then take a short break and start the CMU at 10:00 A.M. sharp. With that, I will give the word to CEO Dag Teigland.
Thank you, Odd-Geir, and good morning to everyone. I'm very happy to see such a great physical attendance today. In particular, since this is my first quarterly presentation for Elkem. It is really a privilege to take the helm at Elkem, not only because it's such a company with such a proud and long industrial history, but also because of the very motivated and highly competent organization. I'm really looking forward to what we can accomplish together. When it comes to the third quarter, I think the best way to characterize the quarter is robust financial performance amid challenging markets. Elkem Foundry Alloys and Elkem Carbon delivered solid financial results due to their strong market positions. The Foundry Alloys performance improved slightly, both compared to the previous quarter and the corresponding quarter last year.
Carbon reported the best result since the third quarter last year, with certain regions showing signs of improvement. The silicon division was impacted by continued weak markets and low sales prices for both silicon and ferrosilicon. In September, Elkem finally received the 1.3 million additional free emission allowances for 2021- 2025. For 2026- 2030, our plants in Norway will receive allocations in line with the industry in Europe. This is very important to secure competitive and predictable framework conditions and a level playing field. Let me start out with saying a few words about ESG. The safety of our people is the number one priority in Elkem. We want every employee to have a safe and good working environment. We're not very happy with the injury rate level we are at for the moment, but the development is going in the right direction.
We will continue to work systematically to improve our performance. The target is, and always will be zero injuries. We also have clear and ambitious goals for reducing our CO2 emissions. Our efforts to reduce emissions starts from a very good level, as Elkem's CO2 footprint is less than 35% of the global average for silicon production. This is supported by renewable energy recovery at several of our plants, and the use of bio reductants. As part of Elkem's strategic update, we concluded to retain our target of reducing CO2 emissions by 25% by 2030. Our long-term ambition is to reach net zero by 2050. However, these ambitions are challenging and will depend on the regulatory environment. The ambitions will also have to be financially sustainable. In addition to reducing our own emissions, Elkem's products and solutions are important to help others reduce their CO2 emissions.
We have many initiatives ongoing within this area. In the third quarter, Elkem Carbon and Danieli Corus signed an agreement where the aim is to reduce greenhouse gas emissions from steel production. By developing solutions to increase the share of recycled steel in the production process, CO2 emissions could be reduced by up to 20%. As announced in the third quarter, we are strengthening the long-term competitiveness at Elkem Rana by investing NOK 260 million to renew the furnace. The investment includes replacement of one of Elkem Rana's two furnaces and its off-gas equipment. The furnace is at the end of life and is already causing production issues. The upgraded furnace will incorporate the latest proven technology, enhancing operational reliability, process control, and energy efficiency. This will secure continued safe and cost-efficient production at the plant.
The new furnace will also facilitate increased use of biocarbon and reduce fossil CO2 emissions in line with Elkem's climate ambition. The installation is scheduled to start in the first quarter of 2027 and will last three to four months. Elkem Rana's second furnace will operate as normal during the period. In September, Elkem received the 1.3 million long-awaited additional free emission allowances under the EU ETS scheme for the period 2021 and 2025. The allocation follows the Norwegian Ministry of Climate and Environment's conclusion in July 25, that Norwegian silicon, ferrosilicon, and manganese producers were unequally treated compared to EU producers. In addition, the plants in Norway have received confirmation that future allowances will be in line with comparable industry in the EU. This is very important to secure competitive and predictable framework conditions. By the end of September 2026, Elkem had approximately 1.3 million allowances available for sale.
The allowances are carried at zero value, while the estimated fair value is around NOK 1.2 billion . The plan is to sell these allowances over time as a normal part of our operations. Elkem Iceland was placed under strategic review in the second quarter of this year due to consistently weak financial performance caused by the extremely challenging markets and a structurally higher cost base than our Norwegian plants. Under this strategic review, all alternatives were evaluated to secure long-term profitable operations. In October, Elkem Iceland entered into a new power purchase agreement. The contract will secure long-term electricity supply at competitive terms and increase the plant's operational flexibility. The agreement runs from 2026- 2029 and covers a volume of 127 MW, which is approximately 1,035 GWh per year.
The contract will significantly improve the plant's strategic attractiveness, but the strategic review will continue as additional measures will be required to restore profitability to an acceptable level. In addition to Elkem Iceland, the retained assets from the silicone divestment are classified as discontinued operations. We will give you a very quick status on these assets. First of all, Elkem Silicon, which is the plant in Roussillon, France, remains under strategic review. The plant has a take- or- pay contract with Bluestar for 50,000 tons of siloxane per year until 2031. In addition, the plant has entered a strategic partnership with U.S.-based Milliken, which will position the plant for sales into the U.S. market. The plant is well-positioned as one of only two remaining upstream silicon producers in the EU. The plant has a strong organization and currently a good operational performance with positive financial results.
In the middle, Silicones India consists of a very small downstream plant. Also, this asset is well-positioned with local customer base. The organization is strong and the operational performance is also good. When it comes to Yongdeng Silicon in China, this plant was closed in 2025. We have a sales process ongoing for the remaining assets, and we expect to conclude the sale. The sales process will, however, be fairly modest, reflecting that the plant is already closed. We continue our efforts to find the best possible solution for all of these assets, but cannot give an exact timeframe for when this can be concluded. Until further notice, these assets will therefore remain under strategic review. We will now continue with an update on the main markets that affect Elkem. The overall market conditions are challenging, but the development is somewhat mixed depending on the sector.
There are signs that industrial momentum is improving, but construction certainly remains weak. In automotive, there are signs of stabilization, but with regional differences. The EU is about to implement measures to limit Chinese hybrid imports. This could ease the competitive pressure and support a modestly improved outlook in Europe. In addition, rising European defense spending creates new opportunities across industrial and automotive supply chains. When it comes to construction, the activity remains weak. The Eurozone PMI stands at 43.4, which signals a continued contraction. Residential construction is particularly challenging, while AI and data center infrastructure are bright spots and remain key growth areas. The manufacturing activity in Europe has shown some signs of improvement with Germany as the bright spot. Steel and aluminum production are important demand drivers for Elkem silicon, ferrosilicon, foundry alloys, and carbon products.
Steel production in the third quarter reflected a normal seasonal decline, with volumes at the level with the same quarters in the previous years. Still, European and global steel production are well below the 2021 level, which has been used as the base in this graph. Steel production in the EU is expected to increase following the implementation of the Carbon Border Adjustment Mechanism from January 26, and stronger EU steel safeguards from July this year. Aluminum production has shown a positive development in Europe despite relatively weak demand. The Middle East conflict is disrupting supply and logistics, reducing exports to Europe and global markets. Let us take a look at the silicon and ferrosilicon markets. The overall picture is that silicon prices have increased modestly from historic low levels. While the safeguard for ferrosilicon in the EU has so far not had any significant impact on the prices.
The reference prices for silicon, here illustrated by the 553 quality, improved modestly in the EU in the third quarter. Prices have continued to rise marginally early in Q4, mainly because buyers in the EU increasingly prefer to source European material. Prices are, however, still at a very low level. In the U.S., on the other side, silicon prices have continued to rise due to tight supply and low inventories. Ferrosilicon prices in the EU were marginally down in the third quarter. We have yet to see any material impact from the safeguard measures that the EU implemented last year. In the U.S., ferrosilicon prices remained stable in the third quarter, and market conditions are expected to improve further. The Chinese silicon market is also important, as the persistent oversupply gives a continued downward pressure on reference prices in the EU.
The silicon prices in China remain at record low levels, as price recovery continues to be hampered by oversupply and high stock levels. So far, higher domestic coal prices and higher electricity prices after the wet season have not yet resulted in an increase in silicon prices. Weak domestic demand in China puts pressure on exports, and China's global silicon exports rose with 4% so far this year. The silicones market, here referred by the DMC prices, is a key indicator as it is an important part of the silicon-based value chain. Also, this industry suffers from Chinese overcapacity. During the third quarter, the DMC prices in China have shown significant fluctuations. First, a steep decline in the prices, followed quickly by a recovery after very effective price management initiatives by the Chinese industry.
As already mentioned, the industry in the EU is suffering from competition from low-priced imports and unfair competition. Protective measures are therefore gaining momentum. This is important to Elkem, as more than 75% of our sale from Norway and Iceland go to the EU. For silicon, the European Commission has now initiated an interim review of the anti-dumping duties on imports from China. The interim review will examine whether the current duties of 16.8% are sufficient, as Chinese oversupply put the downward pressure on prices, which adversely affect European producers. Now, most recently, on October 23rd, the Commission also implemented registration of silicon imports originating in China. This decision could have an immediate impact on our markets, as importers may accrue potential liability if the ADD rate should be increased with retroactive effect. The investigation is expected to conclude within 12 months.
On ferrosilicon, the EU has reviewed the anti-dumping duties on imports from China and Russia for another five years due to risk of renewed dumping. Chinese producers face a general anti-dumping duty of 31.2%, while the rate for Russian producers is 22.7%. Other protective measures in the EU, which are relevant to our industry, includes EU's Clean Industrial Deal and the Carbon Border Adjustment Mechanism, which aims to secure preferential treatment and a more level playing field for producers in Europe. The new safeguards for steel are aimed at increasing European steel production, and a new proposal to limit the number of hybrid electric vehicles imported from China to 350,000 cars per year, potentially cutting the Chinese market share in half. Based on the recent market developments as presented, we will quickly go through the outlook for the fourth quarter.
First of all, Elkem's cost reduction program will continue to contribute positively to the results going forward. We have seen a modest increase in silicon prices in the third quarter, and prices have continued to rise marginally in the fourth quarter. This will not have much impact in the fourth quarter due to time length. The expectations for the fourth quarter results for silicon remain stable, while further price normalization strengthen the outlook for 2027. For foundry alloys, a stable result is anticipated, with seasonally lower sales expected towards the end of the year. The signs of recovery for carbon in certain markets point to a modest improvement in the fourth quarter. Going forward, the new protective measures in the EU are expected to improve market conditions ahead, although the exact timing and magnitude is uncertain. With this, Morten, I pass it to you.
Thank you very much, Dag, and good morning, everybody. I am pleased to go through the results for the third quarter in more detail. Clearly the markets are still challenging, but as you will see, we continue to deliver somewhat improved EBITDA compared to the previous quarter, and that is good. We now report on three segments, carbon and foundry alloys, which are the specialty business segments and deliver stable EBITDA margins at a good level. While clearly the Elkem Silicon EBITDA margin is still hampered by low silicon and ferrosilicon prices. Please note that Elkem Iceland and also our chemicals operations in Roussillon in France are classified as discontinued operations and are not included in the revenue and EBITDA numbers.
Elkem's operating income for the quarter was NOK 3.6 billion, which was down 2% compared to the third quarter last year, and this is mainly explained by lower sales prices. The EBITDA amounted to NOK 554 million, which was down 14% from the third quarter last year. The EBITDA margin for the quarter was 15%, supported by good and stable margins in foundry alloys, carbon, and the materials segment, or materials business line within the silicon division. As always, we have provided a summary of main financial numbers and ratios. I will not go through everything in detail, but the main takeaways are: First of all, as I said, the EBITDA was NOK 554 million, and this include realized effects from the currency hedging programs of NOK 38 million due to a stronger NOK.
Other items amounted to NOK 111 million and consisted of gains on power and currency derivatives, NOK 169 million, currency losses of NOK 49 million and other items of NOK- 9 million. The net finance income was NOK 225 million. This consists of net interest expenses of NOK- 80 million, currency gains of NOK 314 million due to stronger NOK, and net other financial items of NOK- 8 million. The income from tax was NOK- 139 million, which represents an effective tax rate of 24%. Net profit for the period was NOK 319 million, which was an improvement from NOK 29 million in the third quarter last year. Let us take a look at the divisions. As previously mentioned, Elkem has changed the reporting structure and split the former Silicon Products division into Elkem Silicon and Elkem Foundry Alloys.
We will get back to more details in the CMU presentations, but generally, Elkem Silicon contains the commodity segments, silicon and ferrosilicon, while Elkem Foundry Alloys consist of a very specialized product offering. Elkem Silicon continued to be very much impacted by low sales prices for silicon and ferrosilicon. This is to some extent mitigated by strong performance in the materials segment, which includes our microsilica products. We have very strong positions within the materials and microsilica product lines, and here the prices are not linked to market reference prices, but based on more individual negotiations based on a CVM methodology. Total operating income for Elkem Silicon for the quarter was NOK 2,142 million . That was down 9% from the third quarter last year. This reduction is mainly driven by lower sales prices for silicon and ferrosilicon, but also by currency effects due to a stronger NOK.
The EBITDA amounted to NOK 127 million , and this was down 43% from the third quarter last year, but it was an improvement from the previous quarters this year. The reduction from the third quarter last year is mainly due to lower commodity sales prices and negative currency effects. The effects from our previously announced cost reduction program has partly offset this negative impact. As previously mentioned, good results from materials and microsilica are contributing positively to the result for the quarter. The sales volume was generally in line with the third quarter last year. Please note that the reported sales volume does not include materials or microsilica, it's silicon and ferrosilicon. Elkem Foundry Alloys is a very good business segment, and it improved its financial performance despite challenging markets.
In the third quarter, the division accounted for 26% of total income on the group and 43% of the group's EBITDA. Total operating income was NOK 1 billion and NOK 56 million , and this was up 5% from the third quarter last year. The increase in total operating income is mainly driven by positive volume and sales mix effects. The EBITDA was NOK 235 million in the quarter, which was up 7% from the third quarter last year. The improvement is explained by positive volume and sales mix effects. This is, however, partly offset by negative currency effects and also somewhat higher raw material prices. Elkem Foundry Alloys, as I said, has very strong market position, and this has enabled a high capacity utilization and stable and good sales volumes. Our Carbon business is still experiencing challenging markets, but we see signs of improvement.
The division now in Q3 accounted for 20% of the group's total income and 34% of the group's EBITDA. The reported operating income for the quarter was NOK 782 million , which was down 5% compared to the third quarter last year. This is also mainly driven by lower average sales prices and negative currency effects. The EBITDA amounted to NOK 183 million , which is down 21% from the third quarter last year, impacted by lower average sales prices and also somewhat higher raw material costs. The overall sales volume is in line with the third quarter last year. Let's take a closer look at Elkem's key financial ratios. The EPS earnings per share amounted to NOK 0.87+ in the third quarter 2026, and the improvement is largely driven by currency gains in other items and financial items.
However, it is also important to bear in mind that the weak performance that we reported in Q2 was mainly explained by losses in discontinued operations, which also included a fair value adjustment in our Yongdeng operations. Our EPS year to date is NOK-1.18 per share, and this number is based on the current number of issued shares, as we find this more relevant than the average number of shares, which include the Bluestar shares, which were canceled on April 30. Total equity as per end of Q3 amounted to NOK 13 billion, and this gives an equity ratio of 45%. The reduction in equity ratio after the first quarter is mainly a reflection of the cancellation of the Bluestar shares. However, we believe that 45% is a very solid equity ratio, and this underlines our very solid financial position.
As you know, we have raised new equity, and we have also refinanced a significant portion of our debt in the second quarter. This has certainly provided Elkem with a very strong financing and liquidity position. By the end of the third quarter, we had net interest-bearing debt of NOK 6.5 billion, and this gives a leverage ratio of 3.3x last 12 months EBITDA at the end of third quarter. That is a slight increase from the 3.2x that we had by the end of Q3, just because of the fact that Q3 this year was somewhat weaker than the Q3 last year. A key priority going forward will certainly be to ensure a further reduction in net interest-bearing debt and the corresponding leverage ratio.
After the refinancing in the second quarter, we have a very attractive maturity profile on our debt, with all major maturities coming in 2031 and onwards. In addition, we have a very strong cash balance amounting to NOK 5.5 billion, and this means that technically we are able to handle all debt maturities until 2029 with the current cash position. Needless to say, we are very comfortable with the financing position and certainly that gives us a very good opportunity for management to fully focus on strategic and operational matters. Our cash flow has improved compared to 2025. In fact, all three quarters this year have been better than the corresponding quarters last year. This has mainly been driven by strong focus on capital allocation and capital improvements.
In connection with the first quarter, we communicated a target to improve working capital this year by NOK 1 billion and also to limit reinvestments to NOK 1 billion. The purpose was clearly to improve cash generation and to reduce debt. I am very happy to say that we are delivering on these targets. The cash flow from operations this quarter was NOK 421 million, and year to date it is NOK 1.4 billion. By the end of third quarter, Elkem had realized working capital reductions of almost NOK 1 billion for our continued operations. Also our investments, including the reduction that I talked about, have been according to plan. In the third quarter, total investments amounted to NOK 207 million, with reinvestments of NOK 148 million and strategic investments of NOK 58 million. Investments year to date amount to NOK 510 million.
As I said, we are very pleased to have a good direction to deliver on the investment and working capital reduction targets for the year in total. Let me wrap up this presentation by a couple of main takeaways. First of all, we are very happy to see that Elkem Foundry Alloys and the Carbon divisions maintain good results and good margins, even in a very challenging market sentiment. We will certainly get back to the drivers for this in the upcoming CMU presentations. As I said, the Silicon division is clearly more exposed to commodity prices, and that is a tough place to be for the time being. But we have seen silicon pricing increasing modestly in the third quarter, and that is good.
We have also seen that prices have continued to rise moderately in the beginning of fourth quarter, and a continued price normalization would certainly improve the outlook for 2027. Elkem Foundry Alloys' specialized business model certainly means that this segment is very well-positioned to continue delivering good results and attractive margins. The same basically applies to Carbon, where we have very strong market positions and a very good competitive edge. I am also happy to say that we have got clarity on the CO2 quota frame conditions in Norway, and that we have received the outstanding emission allowances for the period 2021- 2025, and that we now have a very good clarity on frame conditions going forward up until 2030. This provides predictability, and it also provides fair competition frame conditions versus our European competitors.
We also clearly believe that the new protective measures in the EU give rise to optimism with regard to improved market conditions going forward in the EU, as there is now clearly a willingness to take more specific action to protect European industries from unfair competition. That concludes this presentation, and I am happy to give the word back to Odd-Geir, who will take us through the Q&A.
Thank you for that, Morten. We will then, as I mentioned, open for Q&A session now after the third quarter results. There is a good audience here today, so I would just like to check with the people here today if there are any questions. I expected that, Magnus.
Yes. You announced the cost cuts, obviously, earlier this year, I think NOK 600 million, mainly due to staff reductions, as I understand it. Those staff reductions were mostly completed in Q2, was my understanding, at least. Can you share some light on what is the impact from that cost-cutting program in Q3? We do not really see any significant EBITDA change, and prices are slightly up. You also guide for flat results, basically, it seems like in Q4.
I am happy to say that we have delivered on those targets. As a matter of fact, we promised to take down manning by 300 full-time employees. That was corresponding to 10% of the total manpower. We have reduced manpower by 400, so that is very good. That is basically done. We have also taken down total indirect cost by NOK 600 million, in line with our targets. You will see that already from Q3, but Q3 is a bit of an extraordinary quarter as it is vacation season, both in our own operations and also certainly among our customers. From Q4, you should see this in our P&L. Of course, this is also when it comes, for instance, to salary. There is, of course, an opposite effect by salary inflation.
Yeah. When you guide for stable quarter in silicon, stable results in ferroalloys, marginally higher results in carbon for Q4, that is not including then the cost cuts or?
That is including everything that we see.
Okay.
Thank you. Marcus, please.
Just touching upon the Elkem Carbon Solutions margin, which has declined materially over the last couple of years.
Of course, steel production has come down and scale for you also come down, but is there any sub-segments within Elkem Carbon Solutions or something with the product mix that has changed over the last year, which also seen margins come down so much? Or is there anything, just to think about how we should see the recovery ahead? Is this predominantly a scale utilization thing, or is there a change in products?
I think if I can start, you should think about this as a reflection of the very weak market that we have experienced and that we are experiencing. Our main markets are still in the Western world, in the EU and in Americas. 80% of what we produce goes to customers, which then deliver into steel industry. Of course, steel industry has not been a good place to be in the Western world during the last five years, and that is clearly hampering demand for our products. We maintain very high market shares. We have very strong products. I think we have a unique product offering, both offering top-notch quality products, but also technical support that no one else is able to offer.
But of course, when you have lower volumes, then you also get a lower dilution of the fixed cost, and that's the main driver behind this. We expect that when we will see a normalization in market demand from steel, we should also gradually see a more normalized demand for our products and a gradually improved margin. I think on a good spot, since you are mentioning also, let's say good news, 20% of our carbon business goes as ramming paste to the aluminum industry. Here we have certainly seen very good progress. There is a good sentiment in the aluminum industry. We have some unique products that we will get back to later today, and we see that this has been very well-received in the market. But also here we see problems in logistics, et cetera.
A big portion of our customers are in the Middle East, big aluminum smelters. Of course, it's not easy to sell products to the Middle East these days.
Any other questions from the audience? You have the chance now. If not, I'll take one question that has come in on those following us on the webcast. It's a question on the impact of commodity inflation on profitability in the third quarter, what will the impact be?
On commodity? Yeah, I guess it is on raw material and higher raw material prices, how that will affect the profitability in the third quarter.
Yeah. I think the main question mark, of course, when it comes to profitability in ferrosilicon and silicon, which are our commodity segments, that is the development in finished good prices. Just to repeat it, today's prices are extremely low. We are significantly lower than the prices that we saw from 2020- 2025, and in real terms, we are at all-time low prices. Then it is good to see that we observe some improvements in silicon, and that is highly needed. That is very encouraging. That can also lead to higher ferrosilicon prices, because we know that ferrosilicon prices are also under extreme pressure, also due to the fact that there has been a substitution from ferrosilicon to silicon among steel customers. When we see, or if we see more normalized silicon prices, that can be reversed.
Of course, we also follow the raw material prices, but here we are very well-positioned. We have a fundamental competitive advantage on power cost, and that is the major input factor that remains. We have stable contracts in hydropower while our competitors are facing higher prices. We have our own electrodes, we have our own quartz, and basically, the cost related to reduction agents, that follows world market prices. We are not too concerned about that.
There are some more questions on the webcast which are more fitting to the strategy or CMU presentation, so I will come back to that later. But one last question before we take a break. There have been discussions on ADD and protective measures and do we have any thoughts or ideas on what the new ADD rate on imports from China could be?
Well, I don't think we can speculate in that. The most important positive news for us right now is that the commission initiated this registration of all the material imported from China. This is a very clear signal that the commission is also considering to introduce more quick reactions rather than waiting all the way until Q3 next year. So that's very positive. But I think looking at one example is the U.S., where the ADD rate is now 140.
Mm-hmm. Yeah.
In the U.S. it's 140%, but we cannot speculate what it will end up with in Europe.
Okay. Thank you to Dag and Morten, and that concludes the presentation for the third quarter. We will then take a short break, approximately 15 minutes, and start here again at 10:00 sharp. For those following us on the web, please stay tuned and we will start again 10:00 sharp. Thank you.
[Break]
Okay, it's 10:00. I promised those following us on the webcast that we would start at 10:00 sharp, so thank you very much for being back in time. Welcome back. We will now continue with the capital markets update. Let me quickly go through the agenda. We will start with the presentation from CEO Dag Teigland, who will give us an update on Elkem's strategy. We will then continue with presentations of each of the divisions. Senior Vice President Luiz Simão will present Elkem Silicon.
Senior Vice President Inge Grubben-Strømnes will present Elkem Foundry Alloys, and Izaias Entringer will present Elkem Carbon. CFO Morten Viga will then be presenting Elkem's new financial targets. Dag Teigland will then give a quick wrap-up of the capital markets update before we open for Q&A. We expect to finish here by 12:00, and then we have a good time afterwards to talk and discuss and have a coffee outside. With that, I'll give the word to Dag.
Thank you, Odd-Geir. Now I am, together with the full management team, very much looking forward to give you an update on how we see the future, Elkem's next chapter. We will try to explain to you how we intend to improve profitability and grow the business. 2026 has been a year of decisive change for Elkem. First of all, we completed the sale of the silicones business to Bluestar, and now Elkem is a much more focused company with an optimized portfolio, with a clear focus on silicon-based and carbon materials. Second, this transaction also transitioned Elkem into a company with a strong Western shareholder base. This is extremely important for our position as a Western independent supplier of critical materials in the current geopolitical context. Thirdly, we strengthened the balance sheet.
We raised NOK 1.8 billion in new equity, and we refinanced EUR 1 billion for bank facilities with 10 relationship banks. This has given Elkem a strong financial and liquidity position. Together with targeted improvement measures, this has contributed to a significant reduction in net debt and an improvement in the leverage ratio from 4.3x in Q1 to 3.3x now. We've also taken firm action on costs. The program initiated in the first quarter includes a reduction of close to 400 full-time positions and expected to generate annual savings of more than NOK 600 million. We are also reducing working capital. Our target is NOK 1 billion, and we have already achieved more than NOK 800 million compared to the end of last year. To preserve cash and support further deleveraging, we have also capped CapEx this year at NOK 1 billion.
Finally, we have reorganized Elkem into a leaner structure with three divisions, and you will hear from the head of each division today. The key message is that all the major structural changes are behind us, and we are now very well positioned to capture profitable growth going forward. I am happy to present the corporate management team that will lead Elkem going forward. It is a strong international team with an extensive industrial and commercial experience. Several members have been with Elkem for many years. They know our operations, our technologies, our customers, and not at least our culture. At the same time, the team brings complementary experience in finance, business, M&A, and from other industries. This combination is important. We need deep operational knowledge, but also a clear external perspective as we build the new Elkem. You will today hear from the divisional leaders outlined in red.
Let us see. Red. Our two Brazilian colleagues, Luiz, will go through Elkem Silicon; Izaias, head of Elkem Carbon, and then Inge will explain the Foundry Alloys business to you. Lastly, Morten will finally give you an update on the financial targets going forward. Following the divestment of Silicones, Elkem consists of three specialized divisions: Silicon, Foundry Alloys, and Carbon. Silicon is our largest division. It produces silicon, ferrosilicon, microsilica, Silgrain, and quartz. Silicon and ferrosilicon are exposed to commodity cycles, while our materials business, which is based on our own microsilica, provides a more specialized product portfolio with more pricing power and stable margins. Luiz will explain more about this business later, and I think it is important for you to understand that the material business in Elkem Silicon represents roughly 25% of turnover this year.
This is moving based on how we optimize the furnaces at any particular time due to market prices. Anyway, materials has become a significant part of the Elkem Silicon division. Elkem Foundry Alloys is the global leader in cast iron metal treatment. The strong position is based on close collaboration with our customers combined with very high metallurgical expertise, tailored products, and technical customer support. Elkem Carbon is the leading supplier of electrode paste and specialty carbon products, with a global production footprint and strong local positions with long-term customer relationships. Together, these three divisions give Elkem a differentiated earnings profile. Materials, Foundry Alloys, and Carbon provide resilience through specialized products, customer intimacy, and robust margins. Silicon and ferrosilicon represents substantial recovery potential when the market normalizes. As you can see, our operations are truly global. We have approximately 3,000 employees across the world.
We have four R&D centers also spread around the world. We have a global production footprint and customer reach, basically all over the world, while Norway is still the center of gravity. Even though Elkem has gone through a lot of changes in 2026, everything we do is still based on the same values. Respect, involvement, precision, and continuous improvement. These are not only words, these are important in Elkem. Our entire operating model, and not at least our Elkem Business System, or EBS as we call it, is based on these four principles. On this operating model, we are to deliver on our purpose, to provide the essential materials that modern society depends on. While we are organized in three different divisions, we still have one common purpose, one common mission, we have one operating model, and we share one set of values.
I would also like to take the opportunity to say a few words about Elkem Business System, because it is so central to everything we do at Elkem. If someone were to ask me, what is the secret sauce for the very successful development of Elkem over so many years in one of the most cut-throat, competitive global industries? My answer would be EBS. EBS is really about people. It is about developing and empowering all our people to identify problems where they are, solve them at the source, and continuously improve the business across four dimensions: HSE, quality, value, and time. It is built on four principles. Again, first of all, the center of everything we do is to empower people to make the decisions where decisions are to be made. Principles are everything we do, it has to make to use. It has to be based on eliminate waste.
Simplify everything, cut everything you do not have to do, eliminate waste. Then we need to have as much control as possible on all our processes. These are the basic principles of what we do. EBS is really at the heart of Elkem's culture. It is our way of working, driving operational excellence, and continuous improvement. It may sound easy, and for some people, it may even sound naive, but it is not. It is hard and disciplined work every day. The good thing about this is that it is not easy to replicate. In my mind, I think this is maybe one of the strongest competitive advantages of Elkem. Now let us have a look outside of the company and what is going on in the world around us. Structural pressures are clearly reshaping our markets. The external environment remains challenging, marked by high uncertainty and low visibility.
But at the same time, this also represents opportunities for Elkem. After many years of manufacturing shifting towards China, the politicians in the Western world now realize that it is not in our own interest to be completely dependent on China for strategic supply chains of critical materials. National security, strategic autonomy, and resilient supply chains have now become more important than the lowest cost sourcing. The U.S. administration has taken a lot of active measures to stimulate local manufacturing, and the EU is following suit. Markets are getting more fragmented, and regional trade patterns are developing. At the same time, Chinese state-supported industrial overcapacity has driven a surge of low-priced exports into Europe, causing a substantial trade deficit with China. This places significant pressure on European industrial production. Energy is another structural challenge.
Industrial electricity in the European Union are roughly double, or industrial prices for industrial electricity is basically the double of what we can see in the U.S. and in China. This represents a major structural challenge to European manufacturing. In addition, transmission and distribution networks struggle to keep pace with the rapid development of renewable energy and electrification. Data centers are adding further pressure to the system. These pressures are challenging, but they also increase the strategic value of regional production, secure supply chains, and not at least competitive renewable energy. Against this backdrop, there is a lot of focus on strategic and critical supply chains these days. Silicon is classified as a critical and strategic raw material, both in the EU and in the U.S., because it is fundamental to modern economies, to clean energy transition, defense, and national security.
Yet today, it represents high supply chain concentration and disruption risk. In Europe, silicon metal is included among the strategic raw materials under the Critical Raw Materials Act. This act sets specific objectives for 2030 for European production of strategic materials and limiting dependency on any single third country. The EU is now finally moving from targets to implementation. The U.S. is moving in much the same direction, although faster and with even stronger focus on national security and trade policy dimension. Both Europe and the U.S. are moving towards the same new industrial policy model: produce more domestically, diversify external supply, build strategic reserves, and protect viable domestic supply chains. Elkem is very well-positioned in this environment. We are one of a relatively small number of established Western producers of silicon and silicon-based materials with a strong cost position.
This gives us a strategically important position in the new geopolitical context. Looking beyond the current market cycles, there are structural megatrends supporting long-term demand for Elkem's materials. First is digitalization and AI. Semiconductors, data centers, and digital infrastructure all depend on advanced materials and substantial new physical infrastructure. Second, energy transition, electrification, renewable energy, grid expansion, and more energy-efficient industrial systems require increasing volumes of high-performance materials. The third is security and strategic autonomy, like we have already talked about. Governments and customers are placing greater value on supply chain resilience, regional production, and access to critical materials. Elkem is positioned right in the middle of these three trends through European production of critical materials and an integrated supply chain. This supports our confidence in the long-term demand fundamentals and reinforces the strategic value of our positioning.
A few words about energy as well, as it is one of the major cost elements in our smelting operations. Secure access to power at competitive and predictable terms is fundamental to our cost position, operating stability, and our ability to make long-term customer commitments. Elkem has power positions in Norway, Iceland, Canada, and Paraguay. This includes long-term contracts, captive hydropower, and industrial tariffs. In Norway, we have a hedging ratio right now of about 85% in the short to medium term, and with some contracts extending until 2037, all in attractive cost locations. We are continuously managing actively our power contract portfolio to optimize our position. These power positions reduce our exposure to short-term volatility, and it supports our competitiveness. Of course, we cannot have a presentation without mentioning AI. We believe we also have a competitive advantage here.
Earlier this year, Elkem received a recognition from Norsk Industri for the most smartest industrial company. We were recognized for systematic digitalization, technology deployment, and measurable industrial use cases. We are proud of this. However, we have just started. Our core processes are extremely data-driven. Elkem possesses deep process expertise, and we have decades of industrial data. A key strategic priority for us going forward will be to extract even more value from our proprietary data sets by applying our scalable AI platform. Largest impact is expected in optimizing our very complex plant operations and raw materials, as well as logistics, sales, and market operations. In particular, where we can use our own data sets collected over years to improve the production of our customers. Applications also include predictive maintenance, demand forecasting, product mix optimization, dynamic pricing, and customer retention management.
Combined with our proprietary data sets, we are in pole position to use AI to create further competitive advantage compared to our competitors. A lot of factors are competing for our attention in our dynamic environment. Sustainability is currently struggling to reach top of mind for many. However, we believe our position as one of the silicon producers in the world with the lowest CO2 footprint is an important competitive advantage. Our climate strategy is built around four elements: emission reductions, low carbon products, circularity, and climate resilience. We keep our target of 25% reduction in scope 1 and scope two emissions by 2030, and we keep the carbon neutrality as an ambition for 2050. We realize this is a demanding ambition, which will be dependent on the right framework conditions, supporting profitable investments in emission cuts.
We will also continue to do our share by decarbonize our operations and maintain our position as a producer positioned on the lower end of the emission curve relative to our global competitors. We are expanding our offering of low carbon products based on renewable power and, where technically possible, higher use of biocarbon reductants. We also continue our work to convert byproducts and waste into value and to improve material and energy efficiency. Finally, climate risk is integrated into our investment decisions and long-term planning. The standard is basically the same as elsewhere in our business. Initiatives must improve competitiveness, reduce risk, or generate sustainable financial return. Capital discipline applies equally to climate-related investments. Our updated strategic direction is based on three priorities in order of importance. Point number 1, develop and protect our business. Number two, we are to grow from the positions where we are already world-leading.
And three, we believe there is room to leverage Elkem core competencies to create additional shareholder value. First priority, to strengthen the competitiveness and resilience of our existing business. We will continue to drive costs and productivity improvements through EBS and operational excellence. We will engage proactively on trade, and industrial policy to maintain market access and address unfair competition. We will also continue to optimize product mix, pricing, and margin management with a clear focus on the value we create for our customers. We will also evaluate other opportunities that can improve our resilience and increase returns. This is basically about extracting more value from the assets and the capabilities we already possess. Priority number 2, grow where we already have leading positions.
This means the businesses where we have successfully demonstrated the ability to leverage the close relationship with our customers to create added value through technical service, product development, and specialization. Basically, where we over time have succeeded with differentiating our products or our product offering from pure commodities, this being materials, foundry alloys, and carbon. We will continue to deepen our customer relationships through close technical service and co-development. We will continue to innovate and increase the share of specialized products that provide clear performance benefits to customers. We will also strengthen the commercial excellence through what we call value-based pricing, product mix optimization, and active margin management. Any capacity expansion will be targeted and selective bolt-on acquisitions may be considered where they strengthen an existing market position or add complementary products, technology, or geographical reach.
Lastly, Elkem must also be open to explore opportunities to create additional values based on our industrial competencies. We have distinctive leading capabilities in industrial production, process technology, raw material management, circularity, and commercial optimization. We are well-positioned as a leading provider of industrial materials in the new geopolitical context, and the growing strategic importance of secure, regional, and resilient critical material supply chains may create new opportunities where these capabilities are relevant. This is not about pursuing major acquisitions or diversifications for its own sake. Our starting capital is capital discipline. We will remain highly selective, prioritize opportunities close to our core competencies, and apply a high threshold for strategic fit and financial return. Where attractive opportunities may emerge, we will consider the most appropriate way to participate.
This could include partnerships or other capital-light models that will allow us to contribute our industrial expertise while limiting investment and risk. In short, we will build from what Elkem already does well, respond selectively to emerging strategic opportunities, and deploy capital only where we see a clear path to attractive long-term shareholder value. The strategy can be summarized in three words: protect, grow, and explore. Restoring profitability, strengthening cash generation, and reducing leverage come first. Selective growth opportunities will be assessed against strategic fit, returns, and balance sheet impact. Let me summarize. Elkem has a leading Western production platform supplying critical materials into markets driven by global megatrends and increasing demand for supply chain security. We have world-leading positions in foundry alloys, carbon, and materials with specialized offering, pricing power, and attractive margins.
In silicon and ferrosilicon, we have strong cost positions and significant earnings potential once markets normalize. We have a low carbon platform based on competitive renewable energy, biocarbon, and circularity. All of this is underpinned by disciplined capital spending and commitment to maintaining investment-grade financial profile. All in all, we have a clear path to stronger financial returns based on continuous improvement, active margin management, growth in our high-margin segments, and market recovery for silicon and ferrosilicon. The major transformation is behind us. We now have a solid foundation for growth and higher returns. This concludes the group-level introduction, and I will now hand the word over to Luiz, who will tell you more about the Silicon division and its market position and business. Good luck.
Good morning. I am Luiz Simão, and I will introduce Elkem Silicon. Elkem Silicon is a leading Western silicon and ferrosilicon producer. It represents more or less 55% of the revenues in 2025, 33% of EBITDA. We have eight main production sites and a little bit more than 1,000 employees. These are not considering the two sites that we have in Iceland and France. I think it is also quite important to start with the competitive advantages that we highlight for Elkem Silicon, that we are a vertically integrated value chain. We have a leading cost position with long-term power supply in favorable areas and number one position in microsilica. Try to keep this on the back of your head because that will be basically what we will talk during this presentation.
In terms of global production footprint, it is quite interesting what you can see here in terms of understanding this vertical integration. We produce more or less 1.5 million tons of quartz in our own facilities. We have mines in Norway and in Spain, and those are the two main ones, in Tana and Erimsa, with a little bit more than 110 employees. There are other smaller operations, smaller mines in those two countries. In terms of silicon metal production, we have two facilities in Thamshavn and Salten. Here, I think it is also important to understand that when we are producing those elemental silicon and ferrosilicon, we have another production at the same time, that is the microsilica.
That is something that we have to understand the impact in the business overall because we do have a sort of control on the amount we can produce between metal and microsilica in a way that we can try to react to index prices in a way to maximize the results of the business. We also have Bremanger producing silicon. It is a quite special, kind of unique production where we produce through chemical reaction with a very high purity and allow us to have some specialties that is quite unique in the world and with interesting applications. Then we have two ferrosilicon plants, Rana and Iceland, that also produce microsilica. Here is quite interesting to understand, I will talk more about this in terms of product lines, that silicon and ferrosilicon are not all the same, and that is what we are trying to explore.
Then we have a chemical plant in France, we call it Roussillon. This you can describe as the downstream part of the silicon value chain or the upstream part of the silicones value chain. We do not produce silicones, but we have a chemical plant that consume close to 25,000 metric tons of silicon, and this gives us stability in terms of production flow. Now I would like to spend a little bit of time in the main production lines that we have, starting with silicon, where we are transforming quartz into critical materials. I think it is interesting to understand the main raw materials in this specific segment because we have quartz, coke and coal, biocarbon, and electricity. The reason it is so important is because we have very strong positions in all of them.
We have our own mines that we sell to ourselves and we also have external customers for quartz. That is very important because then we can select the kind of quartz that we need in terms of balancing costs or quality ourselves. It is our decision, and we decide how we want to produce the metals that we want to do it. We have very long contracts for coal and coke with different sources around the world that allow us to balance also variations in price and at least have a little bit of stability before we are faced with direct cost increase. We have long-term contracts for electricity. In terms of products, we produce silicon metal, and we produce also Silgrain. That is a kind of a special product with a very high purity of silicon with different applications.
I think it is interesting to understand that not all silicon are the same. In terms of how the material is used, we can use it in semiconductors and electronic production. But the most volumes are for the standard material for aluminum industry, and then we also sell to the chemical industry, especially for silicones and polysilicon. That is quite interesting when you have a long value chain and a good relationship with your customers, producing and preparing the product close to them, because then you can also, in idea of increasing the value to the customer, you can discuss specific, very narrow specifications for the customer and specific levels of purity. Because when you are able to do that, when you are able to add additional value to the customer, you can enjoy a premium over the index price.
That is an important part of this business. But this is a commodity business. Being a commodity business, the prices are mostly affected by index prices, and both silicon and ferrosilicon are linked to a specific index. With that, we need to work in cost reduction measures to assure that we are well-positioned in this value chain to be able to promote profitability through costs because you have a lower impact in the index. You can see that in terms of silicon production, and this is where we have common data that we can use, we are very well positioned in the Western world as the most cost competitive in 2025. In terms of key enablers for a low-cost position, we have, as I mentioned, long-term power contracts.
This is probably the most important element in terms of producing those metals, that you are positioned in the right place, and you have a long-term contract to have stability in a way that you have low cost and a stable cost in your operation. We have integrated value chain based in captive quartz mines and electrodes from Elkem Carbon, meaning that we can play not only in terms of cost, but also in terms of quality in a way that we can take advantage of some niche specialties for silicon. We have economies of scales and operational excellence, long-term relationship and broad supplier base, and proximity to key markets. I didn't spend too much time, but our productions are mostly located in Norway, with some operations in France and Spain. We also have in Iceland.
But we do have small processing facilities all over the world and sales offices closer to the customers that we supply special products. I can mention few of them like Japan, Korea, China. We also have a large office in India. We have a very strong operation in the Middle East, in Brazil and U.S. Those are the largest one. I'm not mentioning Europe because then the list will be quite long. Ferrosilicon, we produce high-quality products for specialty steel. Raw materials are pretty much the same, of course, with the addition of iron. What we produce, and I have to emphasize this again, not all ferrosilicon are born the same.
We can also produce high quality or high purity ferrosilicon and refined ferrosilicon in a way that we can move a little bit, that we can enjoy a little bit of a premium on top of the index prices. Of course, you continue to be affected, but you have a small addition in terms of profitability. In a way that the most standard products are offered directly to the steel industry, but we are aiming especially to offer alloy agent to obtain specific properties in electrical and specialty steel that are growing quite a lot and requiring special specifications with a higher grade of purity from some elements. When we are able to do that, and we have the competence and the technology to do it, then we can enjoy a premium over the price.
I think it is very interesting to understand that in this division, we have three main product lines, and the third one is materials. It basically comes from the use or using core competence to create solid returns from wide range of specialty applications. We take the microsilica out of our operations. We also purchase microsilica in the market. On top of that, learning how to use this silica fume from internal and external silicon and ferrosilicon furnaces. We learn how to use it through a very long process of R&D. We learn how to use it in some areas, construction, refractories, and oil and gas. With that knowledge, we also start using other different materials like manganese oxide and titanium oxide in a way that we are trying to broad our applications and the offering to the market.
Today it represents close to 25% of the revenues of the Elkem Silicon. In 2026, because of the historical low prices for the silicon and ferrosilicon, a major part of the profitability of Elkem Silicon division comes from materials. What we are trying to do is to take advantage of opportunities that we see in this area in terms of setting new purpose-made grades and complementary specialty products, extending applications. Usually, for example, in construction, we can have additives to the cement that make them much more resilient to temperatures and pressure and give them a quite special position in the construction industry. We also want to take advantage of a geographic expansion, growing in markets such as India.
India is a market that is still growing quite a lot in terms of construction, requiring now a quite specialized kind of cement, meaning that we can enjoy a quite substantial margins on very specific applications even in the construction. Then bolt-on acquisitions to widen product offering beyond microsilica-based products. As I mentioned to you, microsilica is still today the largest amount of material that we have, but we have start using other different materials. What we have realized is that because of the knowledge we have developed on how to use the product, we can expand this quite beyond what we have today in a way that we can create some sort of compensation for the variations on the index prices. Here, in terms of financial performance, I think there are two things to consider, or at least two perspectives.
One of them is quite obvious, and I do not want to spend my time explaining to you the direction of this curve, but I would like to mention the second one. This is a cyclical market affected by index prices for silicon and ferrosilicon. Low prices, that is mainly due to overcapacity in China, is spilling over to Europe. We have attractive cost position relative to Western producers and weaker results from silicon and ferrosilicon partially compensated by materials product line. I think the message I want to show in this slide, beyond the first one that you have already laughed about it, is the significant potential for margin recovery when markets improve. We are at a historical low in these index prices. Despite that, we still manage to keep a certain profitability.
You can imagine what can happen or the potential of could happen when the market recover. With that, it comes our strategy, expand and evaluate M&A opportunities in the material segment. The first thing, we have to protect what we have, and we are promoting trade defense measures to limit dumping from Chinese producers. Dag has mentioned some actions that is already happening. We believe that that is the only direction that is left to Europe, because you cannot rely everything you produce in some external player that can be or not in favorable of your own politics. We want to increase product specialization to reduce exposure to index prices.
What we are trying to mention here is that even if we will continue to produce silicon and ferrosilicon, there are some niches where if we find the right position and offer to the customer a value that they recognize, we can get a premium on top of the index prices. We need to grow, and we want to expand sales of materials and microsilica because they give us a very attractive margins. Even in this very weak market, and you can imagine what can happen when the market starts to grow again. We want to explore a broader product portfolio based on core competence and geographical diversification because the world is growing, but it is not growing at the same speed everywhere. We need to be closer to where the customer are demanding those special products.
Some parts of the world, they already need them, but they do not know. We need to go there and tell them how they can add value in their own industries, and that is what we have been doing in Europe. We can also do it in, for example, as I mentioned, in India. We are a leading Western player across the silicon value chain, low-cost production based on EBS, operational excellence, vertical integration, and long-term competitive renewable energy power contracts. We have brand recognition and a strong market position in the special niches, clear strategy for maintaining leading cost position, optimizing product mix, and growing the materials product line. We are well-positioned to profit from market recovery from silicon and ferrosilicon, and we are exploring broadening product portfolio based on core competence and geographical expansion. That is basically what I have for Elkem Silicon.
Good morning, and welcome to the spice shop, or Elkem Foundry Alloys, which we also call it. We are the global leader in cast iron metal treatment, serving customers all over the world, wherever there is an iron foundry, with tailored-made foundry alloys that the customer carefully selects together with us through close cooperation to meet the individual need of that specific customer. That is a long sentence to remember, but it actually summarizes what we do and the characteristics of our business in a quite good way. The division makes up about 25% of Elkem revenues. We serve more than 1,300 customers with more than 1,000 different products. Volume is not the most important in our business, but we do have production capacity to produce around 190,000 tons per year.
A more important number is that among our 800 people, 80 of them are working together with customers every day in sales, technical customer support, and R&D. We know our customers very well because we have been working with them for a long time. We offer technical services based on deep understanding, of course, about our production process, but even more importantly, the customer's production process. This enables us to continuously to work on our offering to develop new products that perform even better in the customer's process. With a global setup, efficient production, integrated supply chain, and a leading cost position, our customers know that no matter how uncertain the world is, they can count on us to deliver to their needs. In an increasingly uncertain world, the value of a global footprint is increasing. That being said, we supply mainly regionally.
Our plants in Norway, in Bremanger and Bjølvefossen, mainly supply the European market. Chicoutimi in Canada mainly supply the North American market. Limpio in Paraguay, South America, Shizuishan in China, the Chinese market. Nagpur in India, the Indian market. If there are problems in the supply chain, or if there are new tariffs, then we have backup solutions and can supply our customers from other plants. Some of our most advanced products, they travel really well. What we make in Bremanger and Bjølvefossen, a significant part of that is actually sold in India, in China, and in other Asian countries, and the same goes with inserts that we produce in Dronfield in the U.K. Looking at the value chain, we have the same starting position as Luiz presented. We start with ferrosilicon, which we either produce ourselves or buy from others.
We add various alloying elements, rare earth, magnesium, et cetera, to make two different kind of foundry alloys, FeSiMg ferrosilicon magnesium, or inoculants. Both of them being used to improve the graphite structure in cast iron to give the castings the right properties. In order to achieve that, we offer a wide product portfolio with different chemical specification, different sizing, and different packaging. If you look at the supply in this market, the supply side is relatively concentrated, and in most markets, there is a handful of suppliers. This is the completely opposite of the customer side, where there are thousands of foundries. We are serving more than 1,300. The customer side is very fragmented. An iron foundry is often quite small with limited resources, meaning that they want and require a large extent of technical support. Why did I welcome you to the spice shop?
The reason for that is that an iron foundry uses our products as a spice. It is a very small share of the cost of the foundry. It is a very small share of the volume, used in a foundry, but it is essential to get the performance of the casting right to reduce the scrap rate, to improve economics of the foundry. Because of that, you naturally take little risk when you are treating the metal and choosing which foundry alloys to use. So the entry barriers, the switching barriers in the customer are very high. Just like when you pick your pepper when cooking a steak, you do not look too much on the cost of that pepper if you risk ruining the steak. The customers of our customers are OEMs, producers of big industrial equipment.
About half of cast iron goes into automotive as engine blocks, exhaust systems, brake systems, and other structures. Engineered goods goes into mining equipment, agriculture equipment, robotics. As infrastructure is developed, when population is growing and urbanization is increasing, we need more pipes, manhole covers, et cetera, which is starting to become a sizable part of the market. As Dag touched upon in his presentation, the growth in renewable energy is important for Elkem. For foundry alloys, it is very important, since cast iron is an essential part of windmills. This is maybe the most exciting part of cast iron. It is also the most difficult part of cast iron. When looking at the windmill, the rotor hub on top of it can be one single casting of up to 80 tons. That is a massive casting. Imagine the consequences for the foundry if you have cracks in that casting.
Imagine the consequences of the surrounding if that casting fail and the rotors fall off. Cast iron is a mature market. Iron castings have been around for thousands of years, so you cannot really expect massive growth rates. If you look at mature markets, growth is modest. That is the case in Europe, it is the case in U.S., it is also the case in China. But there are pockets of growth. India is becoming a more and more important market, and the underlying growth in iron castings in India is between 7% and 8% per year. Eventually, Ukraine will be rebuilt, and when that happens, it will be a massive boost to construction in Europe. That will also give growth opportunities for cast iron. Electrification is reshaping transportation.
The challenge is that is putting some pressure on the underlying demand for cast iron, simply from the fact that there is no engine block in an EV. But on the other hand, growth in plug-in hybrids, in heavy trucks, in train, is to some extent compensating for lost demand for cast iron from electrical vehicles. We see growing demand from more complex castings. I talked about windmill as an example of that. This is important for us because it increases the need for advanced alloys and technical support. I also touched upon infrastructure renewal driven by population growth, increased urbanization, but also replacement of old infrastructure in the Western world, driving demand for pipes, manhole covers, et cetera. As Dag also touched upon, trade policies is becoming more and more important in the markets we operate.
And of course, the more uncertain things are, the higher the value of proximity and supply chain resilience is. The key to our success is the success of our customers. It is that our customers create value. We have to make sure that our customer is creating more value with our offering than with the offering of our competitors, or the second-best alternative, as we call it when we talk about customer value management. Then we are helping the customer to create excess or extra value, and that is, of course, something we can share between us. Our strength is a comprehensive value proposition combining products and services. We offer tailor-made products. We have a wide range of products because we need to have products that fit the different need of the different customers. We need to have high-quality products. We need to have low variation in our products.
Even though I have to admit that the market is, to a limited extent, willing to pay for low carbon footprint, we also have low carbon footprint products. For foundries, it is not only about the products, it is about how you use the products. It is about which products you add, where in your process, how you add it, and when you add it in the production process. This is something we help our customers with through our technical customer support people. They are visiting their customers, in some cases every month, to sit down, go through the challenges, go through our proposals for solutions. That is a super important part of our value proposition, and that also enables us to continuously be ahead of competition, because we know so well what the problems of our customers are.
We can address that either through developing new products or new ways of using the products, which we do together with the customers, but also with other industry partners and with universities. Having a good product and good technical support does not help if we cannot guarantee that the customer has the product when it is needed. We have to be able to guarantee that to our customers, and we do that through our footprint, we do that through our supply chain, and we also do that through our leading cost position. You might ask, why do we talk about the leading cost position when we talk about such a specialty business where the value creation at the customer is the key? The point is that our customers, they need to know that they can trust us to be around.
If our competitors have problems, they have to be able to know that we will be there for them. When we create value for our customers, we create value for ourselves. As Luiz showed, of course, when there is a general economic upturn and commodity markets are booming, it is raining on us as well. But we provide a more stable financial situation. We have a top line over the last few years of around NOK 4 billion a year. We are delivering stable EBITDA margins, typically above 20%. This comes from the combination of price management based on customer value management and low cost. On top of that, we have a less capital-intensive business model than the commodities, so we also provide good returns on capital employed.
If we look at our strategy, we follow the same framework Dag presented related to protecting, growing, and exploring. The fundament of our strategy is to continue doing exactly what we do every day, is to work together with our customers to help them create value. That is the basis, and that is so important that it cannot be repeated enough. In the Western world, it is about managing margins, it is about managing prices, controlling cost, and then continuously improve what we call product mix. Not always so easy to understand what does that mean. What it means is that we sell more of products that are performing better at the customer, and where we have higher margins. That is improving product mix. There are growth opportunities.
In Europe, I mentioned Ukraine, but there is also a shift in manufacturing in Europe from the core to more peripheral areas. For us, it is essential to have feet on the ground in markets like Türkiye, Morocco, where we see increased industrial production. There are also other markets where there is growth. I mentioned India with 7%-8% growth per year. We are the largest producer and seller of foundry alloys in India. We have plans to expand that through organic, through basically investments in more production capacity and more people. In China, there is limited underlying demand growth, but we have a relatively low market share, which gives us opportunities to grow. The recipe is the same as in India. It is to increase production capacity and have more salespeople and more technical customer support people.
If possible, we are also looking into opportunities to consolidate the market further through M&A. To summarize the spice shop, this is a very attractive industry structure. It has all the characteristics of that. Consolidated supply side, fragmented customer side. The products can be combined with services, making up a very small share of customer cost, but essential to customer performance. We are very modest, so that is why we say that we only have a superior value proposition. But we truly believe that we do. Through that, I think we are very well positioned to take our fair share of the growth opportunities that are in the spice business. Thank you.
Good morning, everybody. I am happy to be here to share with you the current situation of Elkem Carbon Division and highlight the main strategic actions we are putting in place to better face the market competition and bring the business forward. We are the global producer of specialized carbon products, representing 20% of Elkem revenue. We have approximately 500,000 tons capacity spread in four different continents. That is the main information we have, at least in my opinion, in the whole presentation. The four capabilities in the bottom of the slide explain why our position is difficult to be replicated. First is the deep process expertise we have. Needless to say that the Søderberg electrode paste was invented by Elkem, but we are both producer and user of our paste.
That gives us firsthand information related to quality and how it works in the electrodes, and consequently, how the furnace will perform with our best paste. Second, the supply reliability and customer proximity. We manufacture close to the customers in the main producing regions, supported by a global network that we can provide backup to each other when necessary. Then we have the formulation. This is not simply a standardized or moderate recipe. We change binders, we change dry aggregates, we change the formulation to adapt to the requirements of our customers' furnaces and give them the best performance and a stable operation. Finally, the superior technical service we provide. Our technical specialists give support to customers from the beginning, since the specification of the Søderberg electrode paste, up to the furnace is running stable.
Going all the way from the startup, adjusting parameters, and helping them improving their own process. That is based on more than 100 years' knowledge accumulated by technical experts, providing support around the globe for many different types of furnaces and materials. Our footprint is deliberately multi-local. We have six plants distributed in five different countries. I start with Fiskaa in Kristiansand, is the largest Søderberg producer in our system, but is closely linked to our core technology and our research and innovation competence. We have the two plants in Brazil. It is a different setup. We have the Carboindustrial that is a Søderberg paste producer, and have more specialties in the portfolios, such as ceramic paste and the prebaked electrode. But we have also Carboderivados, that is a coal tar distillation plant, what gives us a fully integrated production chain in Latin America.
This footprint improves customer proximity and transport economics, while also giving us flexibility. As I mentioned before, we can back up one another if commercially or technically necessary. This slide shows how we create value to our customers up to the end users. We provide specialized and essential consumables for high-temperature metallurgical processes, especially steel and aluminum production industry. In a simplified way, I will describe how these products work. Søderberg electrode pastes and prebaked electrodes are used to transfer energy from transformers into the furnaces and create the conditions for having the chemical reactions and refine the ore inside the furnaces. Ramming paste is used for sealing aluminum pot cells and creates the possibility for them to achieve high temperatures to have the electrolysis. Finally, the coal tar pitch that is used as binder for Søderberg electrode production and also anode paste.
In all these three case, a small deviation, the quality or something out of specification can end up in a big, relevant loss for our customers. That is what triggers the importance to be present and give them technical support. Because these products are application critical, that is why customer place a high value on consistency, reliable supply, and technical support, even though the carbon product itself is a relatively small share of their total costs. Health concerns, more demanding regulation, and lower availability of coal tar pitch has challenged us to develop something new in the market. Our ELSEP G, that is the low emission, let us say, paste, is our response to that challenge. It replaced coal tar pitch with an alternative binder that is both pitch-free and PAH-free, without compromising the stable performance of the furnace.
It builds on Elkem's long-standing expertise in carbon materials, our close understanding of our customers' needs, and our ability to innovate. For us, the ELSEP G is a very good example of innovation in practice. Identify a real customer problem, use more than a century of electrode expertise to solve it, and create a solution that helps our customer meet changing requirements. This is still a product that we are improving and scaling production, but the outcomes from the industrial scale trials we have done have demonstrated very promising results. This is how we continue to create value to our customer since their needs evolve. The demand for our products are connected with some specific factors. Basically, customer furnace activity, aluminum cell maintenance, and of course, regional dynamics can impact it as well. For the ferroalloys and silicon demand, there is a very tight and direct correlation with electrode consumption.
Since they are running, they are consuming Søderberg electrode paste or prebaked electrode, it depends on the technology. But the primary aluminum demand is more recurring. That is more based on the five to seven years relining of the pot cells, which makes the demand a little bit more flat. Of course, the geography matters. Europe, Americas, and Africa are particularly important markets for us, supported by our strong local position and customer relationship. China is a large carbon market as well, but our exposure is preliminary, served through our local Chinese plants. Our production model gives us more flexibility than the normal smelters when we refer to silicon and ferrosilicon. We produce to order, and we can adjust production campaigns and product mix to demand, rather than having to run continuously at maximum output. This helps us manage inventories and respond very quickly to regional changes.
The division financial track record demonstrates the quality and resilience of the business. Revenue peaked in 2023 before weaker utilization rates among ferroalloys and silicon producers reduced demand for our products, particularly Søderberg electrode paste. That increased competition and pushed price down. Despite what we see as a temporary reduction demand until industrial activity recovers, Elkem Carbon has maintained good margins. The reasons are structural. Leading market positions, a differentiated product portfolio, essential products with a lower share of the customer cost, long-standing relationship, local supply, and a variable production model that allows us to adapt output and mix when necessary. We also initiated, in 2003, the investment program to strengthen our competitiveness. We acquired and successfully integrated VUM in Slovakia, adding specialized paste capacity and a stronger position in Europe.
In Brazil, we expanded the production capacity of higher quality products, and also improved significantly the product mix. Together, with continuous operational improvements, these investments increase our resilience and position us to revenue and margin recover when customer utilizations normalize. Going forward, profitability will be supported by disciplined pricing and mix management. Operational excellence, of course, based on our EBS culture, also plays a very important role. Our strategy derivates from the global strategy. We also will protect, grow, and explore with capital discipline running through all these three pillars. Protect means strengthening the existing business. Recover, recovering volumes in developed markets, improving product mix, maintaining pricing discipline, managing working capital, and continuing operational excellence. The objective is to support normalized earnings and sustain an attractive return on capital. Grow means scaling specialty and lower emission products.
As I mentioned, our pitch-free paste and ramming paste, as we are already market leaders. Also, we are prepared, and that is valid for all production units. We are prepared to capture new demands that will be created by the direct reduction iron and molten oxide electrolysis that are technologies under development and will create a significant additional demand going forward. We explore, focused on selective complementary acquisition. The emphasis is on bolt-on acquisitions that add a product capability, customer position, or geographic presence that fits our existing platform rather than larger transformational transactions. Any acquisition, of course, must have a clear industrial logic, manageable integration risk, and compelling returns. Organic improvements and disciplined capital allocation remain the foundation of our strategy. Elkem Carbon is the global leader, and we aim to keep it that way.
Our division combines global supply with a strong local presence and product quality stability. This will enable us to keep our leadership position in our key markets. Our products are essential for smelters to achieve stable operation performance despite offering a small share of their own cost. Thus, delivering reliability is the key to get premium price for demanding customers. We provide them support with highly trained technical assistance, which speeds up their operations to reach high required performance and add value to their business. As I mentioned in the beginning of this presentation, our global production footprint, combined with highly qualified technical support and customer long-standing relationship, shapes our business platform. To conclude, combining this business platform with disciplined capital allocation and cost control, we are ready to achieve the usual profitable levels again and secure successful business going forward. Thank you very much.
That is all from Carbon today. I give now the word to our CFO, Morten Viga.
Thank you, Izaias. Hello again. I am very pleased to present Elkem's revised financial targets, which are quantified and specific targets reflecting Elkem's revised strategy. As addressed by Dag, Luiz, Izaias, and Inge, we believe we have a very solid and attractive strategy along three dimensions. We will protect our existing positions, we will grow our business based on number one positions worldwide, and we will also leverage Elkem's core competencies to create additional shareholder value where possible. These elements are clearly underpinned by disciplined capital allocation, selective M&A growth projects, and a strong Elkem culture of continuous improvement, very much based on our Elkem Business System. Our number one strategic priority is a firm commitment to create long-term shareholder value, and there are basically four elements in this commitment. Number one, improve margins and stabilize margins at the higher level than previously.
Number two, maintain a strong capital structure, clearly within investment grade category, enabling financial flexibility, both for attractive dividends while also pursuing prioritized growth projects. Number three, pursue a disciplined capital spending with a clear long-term strategy on reinvestments and also a tight, proactive management of working capital. This will free up capital available for other growth or dividends to the shareholders. Number four, a clear and committed dividend target expressed as a payout ratio versus EPS. Let's look at the specific targets. Firstly, we have raised our long-term EBITDA margin target from previously 15%-20% through the cycle to a new revised target of being above 20% EBITDA margin throughout the cycle. This revision is due to the fact that we believe our current business portfolio, excluding silicones, is better positioned than the previous portfolio, including silicones.
Having said that, we are very well aware of the fact that we are currently below 20%, but we believe that both, let's say, regarding internal improvements, more focused on high-margin segments, and also with a more normalized market sentiment in silicon, this is very realistic. Secondly, our reinvestments should be at a level of around 100% of depreciation amortization going forward. That is a bit higher than the previous target of 80%-90% of depreciation and amortization. But this is also reflecting the fact that our current business portfolio is more capital light than the previous business portfolio, i.e., the starting baseline is lower than previously. Our debt leverage should be below 2.5x last 12 months EBITDA at all time, which will preserve a very solid investment-grade rating. But it is also somewhat higher than the previous target of one to two times EBITDA.
This is also a clear reflection of our conviction that our current business model is more resilient than the previous business model with number one positions in all our three business segments. Last but not least, we repeat a clear dividend target of 30%-50% of EPS, securing a predictable share of Elkem's future value generation to the shareholders. Let's look at the revised targets versus historical performance, and we will start with the EBITDA margin. As mentioned, the revised target is to be above 20% EBITDA margin. We believe that this is realistic. If you look at our historical performance, we have, during the last six years, been at 22%. As a matter of fact, we have in four out of the last six years, we have been above 20%.
We clearly believe that the dip that we have seen in 2025, and also so far in 2026, is very much due to extraordinarily bad market sentiment for the time being. Achieving the new target, it clearly requires a more normalized market sentiment for Elkem Silicon. In addition, we also have a set of very clear enablers, as presented by Dag and the divisional heads. The most important are, of course, we will grow in high-margin segments, particularly in Elkem Foundry Alloys, Elkem Carbon and materials, i.e., switch the portfolio gradually to segments where we have higher and more stable margins. We will drive continuous cost improvements based on our Elkem Business System methodology. We will pursue improved pricing and margin management based on CVM. We will benefit from market normalization and higher volumes.
As we also talked about earlier today, we will capture upside from more expected EU trade defense measures, particularly within our Silicon division, and we are seeing encouraging signs of that. The revised target for reinvestments is 100% of depreciation and amortization. That equals approximately NOK 900 million per year. You will see that this is very much in line with the historical level for the current business portfolio, where the average during the last six years has been 98%. Our starting point is very good, with generally well-maintained assets, providing generally high operating time among the very best in this industry. Going forward, the main enablers will be to leverage on predictive maintenance systems, but also to do more with predictive AI tools. We will pursue standardized solutions, enabling economies of scale.
More and more important, we will leverage our global business model, enabling also low-cost sourcing from India, China, and other attractive locations. On our capital structure, we have updated our leverage target, which is to have a net interest-bearing debt below 2.5x last 12 months EBITDA at all time. We believe that this will clearly keep us well within an investment-grade profile, which is extremely important. You will see that historically, during the last few years, we have been higher than this. This is very much due to the fact that these numbers, they show the numbers including Silicones, where, of course, we had a weak profitability. You may also remember that we had a very capital-intensive growth project in Silicones. As we do not have Silicones in our portfolio anymore, of course, this will not be the case going forward.
Future focus areas and enablers to meet this target will be to improve profitability and cash generation from a better and more focused business portfolio. It will be to pursue a very disciplined capital allocation, and it will still be to maintain a strong and tight working capital management. Our dividend target will continue to be 30%-50% of EPS, in line with our previous target. As you are quite aware of, our historical EPS has been quite volatile, i.e., we have also had volatile dividends. However, our payout ratio has been very predictable, pretty much spot on our midpoint target of 40%. Also the cumulative dividend payout has been quite good with almost NOK 8 billion or NOK 12.7 per share, since the IPO in 2018 and 2019. The numbers also reflect an average dividend yield of 4.8%.
The main future enablers for securing an attractive and a predictable dividend will of course be to improve the underlying profitability and cash flow generation. Our new business portfolio, as I said, will be less, and is less capital intensive than the previous one, and that is enabling a higher dividend capacity. As I also said, we will apply a very disciplined capital spending going forward, where we will balance the need between growth and direct return to the shareholders. To summarize, we are committed to provide long-term shareholder value through attractive margins and predictable dividends. The main pillars will be, we will ensure a more stable and attractive EBITDA margin, above 20%. We are committed to a strong capital structure, solid within investment grade, and with a future target of net interest-bearing debt versus EBITDA leverage ratio below 2.5x.
We will pursue a disciplined capital spending through predictable reinvestments and a very tight and professional working capital management. Last but not least, our clear target is to secure attractive and predictable dividends within 30%-50% of EPS, enabling both direct returns to the shareholders while also maintaining financial capacity to invest in long-term profitable growth. Thank you very much.
Okay, just to wrap up, I hope this session has contributed to giving you a better understanding of the breadth of Elkem and what we are doing, and also what we can expect for the future. When you leave, I hope there are three points you should take with you. One is, in the past, Elkem was perceived as a commodity producer. I hope what you've seen today is that we have successfully developed very interesting market positions within materials, within foundry alloys, and within carbon. This has happened with a combination of very strong technical competence of Elkem, combined with close relationship with customers. This is where we have higher stable margin because we have pricing power. Point number two, we are still in commodities. We are in silicon and ferrosilicon.
Here, as we have seen, we have very strong cost positions in the Western world. We are very well-positioned for a recovery in these markets. Point number three, the tide is turning, or I would say the tide has turned. After decades of manufacturing moving to China, Western world is now taking action. The U.S. administration has been moving very forcefully in this direction for a long time. Finally, Europe is also taking action, and with the Elkem portfolio, we are very well-positioned to benefit from this new geopolitical context. Thank you. That was it.
Okay. Thank you to Dag and all the others. We will now open for a Q&A. From the audience, we'll start with you. Any questions? Magnus, please.
A couple of questions. Magnus Rasmussen, SEB. Firstly, on the CapEx side, just initially for as long as the market remains a bit soft, what could we expect in terms of CapEx beyond maintenance CapEx?
Quite limited. We have said that we will keep the CapEx very low this year. Then we will monitor the situation going forward. We will be predictable when it comes to reinvestments, approximately NOK 900 million this or next year and the years thereafter. Growth CapEx beyond that will be dependent on two things. First of all, of course, on the opportunities, we will be very selective to choose the right projects, but also on our financial capacity.
Hopefully when the market improves significantly in the future, you have to be, of course, disciplined on capital allocation now. What should we expect the next time we have high profits, and why do you have a cap on your payout ratio in your dividend target?
We will find the right balance. That's our target. To be predictable, and find the right balance between, let's say, direct payback to the shareholders. We're also sure that there will be, and there are a lot of growth initiatives, and we will try to get the best of both worlds. Of course, defining a target of 30%-50%, it's not carved in stone. If we have a fantastic year, I'm sure we can also see if there will be opportunities for even more dividend. But we don't talk about that now.
Okay. Any other questions? Yes.
Just to follow up on the capital framework. The payout ratio is lower than your comparable peers. There is no comments on extra distribution on if you have solid returns, and if the leverage is lower. If you just do the math on normalized cyclical or through-the-cycle margins, it implies significant cash accumulation on the balance sheets. This is quite weak commitment if you ask me, so why won't you commit to a stronger position on the capital framework and extra distributions?
No, I think we are very clear, and we are very predictive in our guiding. We're saying 30%-50% dividend. We believe that is very attractive. I agree-
It's not compared to peers.
I agree with you. We believe that, let's say, the dividend capacity for a company like Elkem with a normalized earning and compared to the previous portfolio, a rather capital light business model, then there should be a good dividend capacity. That is our thinking now, and that is our target going forward to, let's say, be predictive on solid dividends, but while also maintaining investment capacity.
Nils Foldal from Manara. Thank you for a very good presentation. It was really educational. Congratulations to the new CEO, too. Very pedagogisk. You say the tide has turned or whatever, right? So how can you actually say that in relation? Is that based on your discussions with the customers or partners, or is it just hope and beliefs? If so not, what kind of timeframe do you see that the tide has turned?
My comment regarding the tide has turned, clearly the development over the last decades, manufacturing has moved from the Western world to China. The first Trump administration said we have to do something about this. We are about to get completely dependent on China for a lot of very critical materials and industries. The U.S. administration has used the full toolbox to prevent imports from China to incentivize manufacturing in the U.S. Now we are starting to see results because it takes some time before you can rebuild manufacturing capacity. The EU has talked a lot about this, but also here we are starting to see now going from talk to action. It is a very clearly communicated objective by the politicians. They still need to deliver to make sure that we keep whatever industry we have in Europe and hopefully pick up pace again.
That is what I mean with the-
But still, you are not a part of the EU. You speak as if you were a part of the EU.
Yeah.
Secondly, you are in Canada where there is an ongoing trade war. I do not know exactly how that affects you, but you are still on the outside and not on the inside.
I agree. That is a risk factor. We are within the European, what do you call it? Zone or trade-
Schengen
Yep. We have seen examples for the EU protecting their countries and keeping Norway out. But for most of the discussions, we are looked upon as being part. Also from a strategic perspective for the European Union, Norway delivers about 40% of the silicon required in the European Union. That is kind of the picture. Basically, I think it is clearly the development of manufacturing moving to China has stopped, and we are seeing signs that things are coming back.
Very good. Any more questions here from the audience? Yes.
Snorre Vevstad, Th. Dahl AS. You have been emphasizing the focus on value add to your customers. If you should give a percentage of how large part of your revenues is value add, and how large is the commodity part of your business today, and how do you foresee that, or what is your plan, where to be on that ratio two years from now?
I think right now, with the low commodity prices, commodity is maybe around 40%. All in all materials, foundry alloys, and carbon represent roughly, I would say, 60%. It is very difficult to answer your question because it depends so much on the pricing of the commodities. Clearly, our objective is that that is the part that is to grow. In a few years ahead, that part should be significantly bigger than what it is today relative. Of course, if the commodity prices increase substantially, that will also affect the balance.
Okay. Any other questions? If not, the questions we have received on the webcast seem to be very much along capital allocation. I think that has been well covered. Elkem entered into a new power contract in Iceland, and that has been said to improve the strategic attractiveness of the plant. Could you please elaborate a bit on that, Dag? That is one of the questions.
Yes. Iceland also has very attractive prices for renewable energy. In spite of this, our Icelandic plant has not delivered financial performance to our expectation for the last two years because inflation has been high in Iceland and the other cost elements have increased above the Norwegian element. We are exploring all alternatives with Iceland. Then we had a power contract that expired beginning of 2029, and we realized this was too short of a time horizon to find good strategic decisions. That is why we first wanted to secure competitive power for a longer period of time, because then our strategic options are more clear. Data center has been mentioned, and I think we are very clear we are not considering to close the plant and build a data center.
We now have some flexibility to use some of the power maybe to strengthen the position of the ferrosilicon plant, maybe for a data center or maybe for something else. This new contract gives us a lot of flexibility that will strengthen the plant at Elkem Iceland.
Building on that, we have two significant assets. Elkem Iceland is one, Ferrosilicon plant is another, which are under strategic review. When do you expect to conclude on those processes?
We cannot guide on the timing of these processes. These are, let's say, by nature, unpredictable. Right now the plant is operating well. It is very well managed activity, and it has strategic importance for Europe. I think in this setting, we will continue to work on alternative strategic solutions, but we cannot guide on the timing.
Okay. Unless there are any more questions, I think that we conclude the meeting. There does not seem to be any more questions. I would like to thank all of you for participating. I would like to thank all of you for participating on the webcast. Thank you very much for that and have a nice day.