Novelis, the world leader in aluminum rolling and recycling, today reported a net loss of $89 million for the second quarter of fiscal year 2017, compared to a net loss of $13 million in the prior year period. Current quarter results include $112 million loss on extinguishment of debt related to the refinancing of $2.5 billion of Senior Notes during the quarter which will drive significant interest savings, and $27 million related to the sale of Novelis’ equity interest in Aluminum Company of Malaysia, a non-core operation in Malaysia. Excluding these and other tax-effected special items, the company reported net income of $60 million in the second quarter of fiscal 2017, up from $25 million reported in the second quarter of fiscal 2016.
“We continued driving the positive momentum achieved over the last several quarters into the second quarter,” said Steve Fisher, President and Chief Executive Officer for Novelis. “Our recurring strong EBITDA performance is a result of strategic investments in new capacity, driving positive portfolio mix and efficiency gains through metal input optimization. We are confident this strategy, coupled with plant productivity and asset efficiency, will continue to drive enhanced operational performance and a stronger product portfolio.”
Adjusted EBITDA for the second quarter of fiscal 2017 increased to $256 million from $182 million in the prior year period. Excluding metal price lag in both periods, Adjusted EBITDA increased 14 percent to $270 million. The increase was primarily driven by productivity gains, better metal mix, and favorable foreign exchange gains, partially offset by higher employment costs.
Net sales decreased five percent to $2.4 billion for the second quarter of fiscal 2017. This was driven by lower average aluminum prices and a two percent decline in total shipments of rolled aluminum products to 773 kilotonnes, partially offset by the favorable impact from our strategic shift to higher conversion premium products including a 12 percent increase in automotive sheet shipments to record levels.
The company reported free cash flow of $44 million for the second quarter of fiscal 2017 as compared to $140 million in the prior year, with the reduction due primarily to the timing of working capital and interest payments. These factors are partially offset by stronger EBITDA performance in the current year and reduced capital expenditures of $46 million as compared to $75 million in the prior year period.
“As a result of our successful bond refinancing, we will generate $55 million in interest savings annually going forward,” said Devinder Ahuja, Senior Vice President and Chief Financial Officer. “We now expect to generate free cash flow in the range of $300 million to $350 million for the full fiscal year 2017.”
As of September 30, 2016, the company reported a strong liquidity position of $1.0 billion.
Second Quarter of Fiscal Year 2017 Earnings Conference Call
Novelis will discuss its second quarter of fiscal year 2017 results via a live webcast and conference call for investors at 8:00 a.m. ET on Monday, November 7, 2016. To view slides and listen only, visit the web at https://cc.callinfo.com/r/1eknfsjs9bhp2&eom. To join by telephone, dial toll-free in North America at 800 757 8529, India toll-free at 18002660841 or the international toll line at +1 212 231 2920. Presentation materials and access information may also be found at novelis.com/investors.
