Novelis Q2 net income rises 27% YoY to $163 million on higher aluminium prices

Novelis expects its cash flows to be negatively impacted by $550 – $650 million through the current fiscal because of the fire at its Oswego unit in New York in September. This includes an adjusted earnings before interest, tax, depreciation and amortization impact of $100 – $150 million.

The subsidiary of India’s Hindalco Industries will restart this hot mill in December. It had It had previously anticipated starting this mill in the March quarter.

“Teams have been working around-the-clock to restore operations at Oswego quickly and safely, while leveraging alternative resources to minimize customer disruption,” it said in a statement.

Novelis has recognised charges of $21 million related to this incident during the quarter. It also said that the plant is insured for property damage and business interruption losses related to such events, and about 70-80% is recoverable through insurance in future periods.

The company also reported its earnings on Tuesday, and has reported a 27% year-on-year growth in its net income for the September quarter at $163 million. Excluding special items, the bottomline was 37% lower compared to the previous year at $113 million.

The US-based aluminium-maker’s net sales were 10% higher compared to the previous year at $4.7 billion, mainly driven by higher average aluminum prices. Total rolled product shipments for the quarter were in line with the previous year at 941 kilotonnes.

“Slightly higher automotive and aerospace shipments were offset by lower beverage packaging and specialty shipments,” the company said in a statement.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell 9% on year to $422 million, while the adjusted EBITDA made on each tonne of aluminium stood at $448, down 8% on year.

The fall in EBITDA was primarily on account of a net negative tariff impact and higher aluminum scrap prices, which was partially offset by higher product pricing and cost efficiency actions, the company said.

“Our second quarter financial performance was in line with our expectations for sequential improvement, reflecting solid execution in a continued dynamic environment,” Steve Fisher, chief executive officer of Novelis Inc was quoted in a release.

“Our diverse global footprint will be further strengthened with the significant investment we are making in the U.S. to construct a state-of-the-art plant in Bay Minette to bring needed capacity to an undersupplied domestic market,” he said.

Novelis has spent $913 million on capital expenditure in the six months of the current fiscal so far. This was primarily for strategic investments in new rolling and recycling capacity under construction, including the company’s new greenfield rolling and recycling plant in Bay Minette, Alabama.

The company announced its earnings after market hours in India, and shares of Hindalco Industries ended down 1.8% at 830.70 rupees on the BSE. Hindalco Industries will announce its earnings on Friday.

…moreless

…moreless