Novelis’ net income falls 18% in Q2 FY 2025 to $128 million

Novelis Inc., a global leader in sustainable aluminium solutions and a subsidiary of Hindalco Industries, announced its financial results for the second quarter of fiscal year 2025 on November 6, 2024. The company, renowned for its dominance in aluminium rolling and recycling, reported a significant decline in its quarterly earnings.

Net income for the September quarter fell by 18 per cent, amounting to $128 million. This downturn reflects the challenges the aluminium sector faces amidst evolving market conditions. Despite the decrease, Novelis remains committed to its core innovation and sustainability strategy, leveraging its leadership to navigate complex industry dynamics.

The US-based aluminium rolled products company reported a net income of $157 million for the corresponding period in the previous financial year, according to a filing with the BSE.

Steve Fisher, President and CEO of Novelis Inc., said, "Our global footprint allowed us to achieve record beverage packaging shipments in the quarter and also mitigate the impact to customers from the flooding-related outage at Sierre."

"We also remain committed to sustainability and our goal of becoming carbon neutral by 2050. Our recently released fiscal year 2024 sustainability report highlighted the progress against this target and the 63 per cent average recycled content rate in our products - a leading figure for the industry. Our success in these areas is the result of innovative approaches and technologies and strong relationships with our customers who increasingly demand high-recycled content, lower-carbon aluminium products."

Second quarter FY 2025 financial highlights

Net sales for the second quarter of the fiscal year 2025 increased 5 per cent versus the prior year period to $4.3 billion, mainly driven by higher average aluminium prices and a 1 per cent increase in total flat rolled product shipments to 945 kilotonnes. Strong demand for beverage packaging sheets was mostly offset by lower shipments to some speciality end markets as well as lower automotive shipments due primarily to the impact of the flooding-related production interruption at our Sierre, Switzerland, plant during the second quarter this year.

Net income attributable to our common shareholder decreased 18 per cent versus the prior year to $128 million in the second quarter of fiscal year 2025. The current year period includes $61 million in charges associated with the production interruptions at Sierre, as well as higher restructuring and impairment expenses and lower operating performance, partially offset by a favourable change in metal price lag and unrealized derivatives year-over-year. Net income attributable to our common shareholder, excluding special items, was down 1 per cent year-over-year to $179 million.

Adjusted EBITDA decreased 5 per cent versus the prior year to $462 million in the second quarter of the fiscal year 2025, primarily driven by less favourable metal benefits due to a relatively rapid increase in aluminium scrap prices, unfavourable product mix, and a $25 million impact at Sierre as a result of the flood. Higher beverage packaging shipments partially offset these factors. Adjusted EBITDA per tonne was down 6 per cent year-over-year to $489.

Net cash flow provided by operating activities was $374 million in the first six months of the fiscal year 2025 compared to $290 million in the prior fiscal year period, primarily due to favourable changes in working capital. Adjusted free cash flow was an outflow of $345 million in the first six months of fiscal year 2025, higher than the prior year period outflow of $300 million due to higher capital expenditures and partially offset by higher cash flow from operating activities. Total capital expenditures were $717 million for the first six months of fiscal year 2025, a 16 per cent increase versus the prior year period, primarily attributed to strategic investments in new rolling and recycling capacity under construction, most notably in the U.S. for Bay Minette. The company had a net leverage ratio (Adjusted Net Debt / trailing twelve months (TTM) Adjusted EBITDA) of 2.5x on September 30, 2024.

Devinder Ahuja, Executive Vice President and CFO of Novelis Inc. said, "We are more focused than ever on diligently managing the balance sheet as we continue to progress the growth investments we have underway and navigate shifting market dynamics."

The company had a total liquidity position of $2.1 billion, consisting of $1.1 billion in cash and cash equivalents and $1.0 billion in availability under committed credit facilities, as of September 30, 2024.

Image credit: Gulf Coast Media

Information Credit: Novelis Press Release