Novelis reports “outstanding” results reflecting market growth

Novelis Inc, a global leader in aluminum rolling and recycling, recently announced net income from continuing operations of $303 million, an increase of 597% year-over-year. This compares to a “net loss of $61 million in the prior year, which was negatively impacted by the COVID-19 pandemic and special items related to acquisitions,” according to a press release. Excluding special items in both years, “first-quarter fiscal 2022 net income from continuing operations of $260 million was up significantly compared with $22 million in the prior year.

Some highlights of this report:

Net sales increased 59% to $3.9 billion for the first quarter of fiscal 2022 compared to 2021, due especially to a 26% increase “in shipments, favorable product mix and higher average aluminum prices.”

Total shipments of flat-rolled products increased to 973 kilotonnes in the first quarter of fiscal 2022 compared to 774 kilotonnes in the prior-year period. According to Novelis, it has been the result of “strong demand in end markets in the current year, compared to a soft shipping quarter in the previous year affected by temporary customer closures due to the COVID-19 pandemic”.

Shipments of beverage containers and specialty products so far this year have increased due to as they point out “strong market demand,” but when it comes to automobiles, shipments have been double compared to a year marked by Covid “despite some headwinds from the current shortage of semiconductor chips affecting the automotive industry.”

Adjusted EBITDA increased to $555 million, an increase of 119% year-on-year. This was mainly due to “higher volume and a favorable product mix, as well as metal benefits and a $47 million gain related to a favorable ruling in a Brazilian tax litigation, partially offset by higher costs from higher production volume and inflationary cost”.

“Our strategy to grow a diverse portfolio of sustainable aluminum products using our leading geographic footprint to meet strong demand again delivered outstanding results in the quarter,” said Steve Fisher, president and chief executive officer of Novelis Inc. “With new automotive capacity on the rise in the U.S. and China and the financial strength to continue to invest in growth opportunities aligned with our long-term carbon neutrality goals, we will further expand our leadership position in delivering sustainable, low-carbon aluminum solutions in premium end markets around the world.”

The company achieved its target net leverage ratio (net debt / adjusted TTM EBITDA) of 2.5x at the end of the first quarter of fiscal 2022, compared to 3.8x in the prior year period after the closing of the Aleris acquisition and 2.9x in the fourth quarter of fiscal 2021.

Novelis is a global leader in innovative products and services and the world’s largest aluminium recycler. Its customers are in the aerospace, automotive, beverage can and specialty industries in North America, Europe, Asia and South America. Novelis is a subsidiary of Hindalco Industries Limited, a leader in the aluminium and copper industry, and the metals flagship company of the Aditya Birla Group, a Mumbai-based multinational conglomerate.