The company’s inventory decreased to 908 kilotonnes at the end of the quarter ended 2022. This result followed a reduction in shipments by beverage companies, which caused a sequential drop of 8 percent after their inventories declined.
Satish Pai, CEO of Hindalco Industries, said.
“despite this quarter’s successes due to external factors, we believe the long-term story remains positive backed by our strong balance sheet and resilient business model.”
As Novelis derives 58 percent of its volumes from beverage cans, the drop reflects the change in the post-pandemic global beverage consumption pattern. Hindalco Industries, owner of Novelis, confirmed that stock reductions by can customers affected Novelis’ shipments.
In this regard, Pai, added that the stock reduction is the result of high inventory held by can customers, who expected high demand for canned beverages to continue at pandemic levels.
“Consumption in the home has changed as more people drink outdoors.”
he remarked.
Novelis recorded lower volumes in Europe and Asia, due to lower shipments of beverage containers by its customers. This cost it 60 thousand tons during the December 2022 quarter. South America also experienced larger inventory reductions, leading to a drop in overall demand. This is expected to remain the case for two more quarters.
A year ago, the multinational saw solid growth for its products in the beverage packaging industry. This was mainly due to the high demand for beverages in the home, as well as a shift towards a greater preference for environmentally sustainable packaging. According to the company’s latest market estimates, these fundamentals remain stable thanks to widespread consumption, product innovation and preference for environmentally friendly packaging.
In this regard, Pai is optimistic that demand will return to pre-pandemic levels and reach a 3 to 4 percent annual increase. For now, the decline in inventories is expected to continue until the first quarter of the next financial year.
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