Element: revenue nearly flat, but EBITDA turned negative by 129.3%

On August 25, Element released its results for the first half of 2026. Revenue declined 2.0% year-on-year, EBITDA fell 129.3%, and net loss was 247.2% of the prior-year profit. This review examines what caused such a collapse in profitability and why cash flow remains negative.

Key takeaways

— Revenue for the half-year declined 2.0%, but EBITDA collapsed 129.3% – margin turned negative at -6.7%

— Net loss for the half-year was 247.2% of the prior-year profit, and net margin fell to -18.8%

— Net debt to LTM EBITDA stands at 4.0, and EV/EBITDA LTM is 177.3, indicating an extremely high valuation

— Operating cash flow for the trailing twelve months is negative – minus 48.0 billion RUB, limiting investment and dividend capacity

— No dividends were paid over the last 12 months, and the model expects zero payouts in the next period

— Shares fell 4.5% on the release day and 13.4% by August 17, reflecting market disappointment

Key figures, RUB bn

Revenue for the half-year declined 2.0%, but EBITDA collapsed 129.3% – margin turned negative at -6.7%

In the first half of 2026, Element's revenue amounted to 38,300.0 million RUB, 2.0% lower than the same period last year. The decline is modest, but it came amid expectations of growth, and the market reacted with falling quotes.

The situation with profitability is much more serious: EBITDA for the half-year fell 129.3% year-on-year, and the EBITDA margin was -6.7% versus 22.3% a year earlier. This means that operating activities are generating losses, and the company is not profitable at the operating level.

Net loss for the half-year was 247.2% of the prior-year profit, and net margin fell to -18.8%

Net profit for the first half of 2026 turned into a loss, amounting to 247.2% of the profit for the same period last year. Net margin fell to -18.8% versus 12.5% a year earlier.

Such a reversal is not only due to operating losses but also possibly to one-off items, though they are not disclosed in the report. For shareholders, this means the company is not only failing to earn but is also burning capital.

Net debt to LTM EBITDA stands at 4.0, and EV/EBITDA LTM is 177.3, indicating an extremely high valuation

At the end of the latest reporting period, Element's net debt amounted to 1,111.0 million RUB, corresponding to 4.0 EBITDA for the trailing twelve months. This is a moderate level, but it does not account for negative operating cash flow.

The company's market capitalization is 48,123.4 million RUB, and EV/EBITDA LTM reaches 177.3. Such a valuation implies that the market expects a sharp recovery in profitability, but operating results do not confirm this yet.

Operating cash flow for the trailing twelve months is negative – minus 48.0 billion RUB, limiting investment and dividend capacity

Over the trailing twelve months, Element's operating cash flow was -48.0 million RUB. A negative value means the company spends more than it earns from core operations and must cover the deficit through debt or asset sales.

Net debt decreased by 9.4 billion RUB over the last 12 months, but this happened amid negative operating cash flow, indicating external financing. Such dynamics raise questions about the company's ability to sustain investments and pay dividends.

No dividends were paid over the last 12 months, and the model expects zero payouts in the next period

Over the last 12 months, Element has not paid dividends, and the model estimates the next payment also at 0.0 RUB per share. With a fair yield of 7.0% and a payout ratio of 0.21 of profit, the absence of payments seems logical amid losses.

For investors expecting dividend income, this is a negative signal. The company prefers to channel funds into operations, but so far this has not yielded results.

Shares fell 4.5% on the release day and 13.4% by August 17, reflecting market disappointment

Before the earnings release, Element's shares traded at 0.11735 RUB. On the release day, quotes fell 4.5%, and by August 17, 2026, they were down 13.4% from the pre-release level. This indicates that the market reacted negatively to the weak results.

Given the high valuation (EV/EBITDA LTM 177.3) and negative profitability, the decline in quotes looks justified. Investors are revising expectations, and in the coming quarters the key will be the restoration of margins.

Valuation on the latest reported figures

Bottom line

Bottom line: the first half of 2026 was disastrous for Element – revenue was nearly flat, but EBITDA and net profit turned deeply negative. The company is not generating operating cash flow, and dividends are not being paid. At the same time, the valuation remains extremely high, making the shares vulnerable to further disappointment. For an investor, the key question is whether the company can restore margins to last year's levels, and what will drive that recovery.