Feb. 17, 2016

Novelis Reports Profitable Quarter

Aluminum maker Novelis, Atlanta, reported net income of $6 million in the third quarter of its 2016 fiscal year, which ended Dec. 31. The earnings were a decline from the $32 million in the prior quarter and the $54 million in the same quarter of 2015, but defied industry trends during the challenging period. Net sales declined 17.3 percent in the quarter to $2.4 billion.

For the year to date, Novelis reported a net loss of $67 million, compared to net income of $119 million through the first nine months of the previous fiscal year. Year-to-date sales of $7.5 billion were down 10.6 percent.

Excluding the impact of metal price lag in both quarters, Novelis’ adjusted EBITDA totaled $238 million in the third quarter, up 4 percent from the prior year. The increase was driven by higher shipments of automotive and beverage can sheet, partially offset by less favorable recycling benefits due to depressed aluminum prices.

"Our good performance this quarter validates our strategy to grow aluminum rolled products capabilities around the world to serve high-growth, high-value industries including automotive and packaging," said President and CEO Steve Fisher during the company’s quarterly conference call. "The success of our expansion projects coupled with our steady improvement in operational performance positions Novelis for continued growth and profitability."

Novelis’ shipments of rolled aluminum products grew 3 percent to 779 kilotons in the third quarter. Despite higher shipments, revenues declined due to lower average aluminum prices and local market premiums. While average local market metal premiums stabilized during the third quarter, the company reported negative metal price lag totaling $26 million as it continued to turn higher cost inventory from previous months. Although the company uses derivatives contracts to minimize the price lag associated with LME base aluminum prices, adequate cost-effective hedges are not available for local market premiums, said the company.
 

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Wednesday, October 18, 2017