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Novelis reports solid second quarter of fiscal year 2015 results

Net Income Increased 65% versus Prior Year to $38 Million Sales Increased 17% versus Prior Year to $2.8 Billion Adjusted EBITDA Increased 1% versus Prior Year to $230 Million Shipments Increased 7% versus Prior Year to 765 Kilotonnes Novelis, the world leader in aluminum rolling and recycling, today reported net income attributable to its common … Continued

  • Net Income Increased 65% versus Prior Year to $38 Million
  • Sales Increased 17% versus Prior Year to $2.8 Billion
  • Adjusted EBITDA Increased 1% versus Prior Year to $230 Million
  • Shipments Increased 7% versus Prior Year to 765 Kilotonnes

Novelis, the world leader in aluminum rolling and recycling, today reported net income attributable to its common shareholder of $38 million for the second quarter of fiscal year 2015 compared to $23 million in the second quarter of fiscal year 2014.  Excluding certain tax-effected items, net income was $42 million, up 14% compared to the second quarter of fiscal year 2014.

Adjusted EBITDA for the second quarter of fiscal 2015 was $230 million, a 1% increase compared to $228 million reported for the prior year. The increase was primarily driven by higher shipments and cost benefits from using recycled metal inputs.  These favorable drivers were partially offset by continued pricing pressures in the Asian markets, a higher fixed cost base due to expansions ahead of revenue generation, and unfavorable currency fluctuations late in the second quarter.

“Our solid earnings are a result of the execution of our long-term strategy to capture growth through added capacity and to lower costs through increased use of recycled materials,” said Phil Martens, President and Chief Executive Officer for Novelis.  “We had record shipments of both can and automotive sheet in the second quarter, even before our new auto capacity in the U.S. and China began contributing to shipments.  These auto facilities are now accelerating production to meet increasing customer demand for lightweight vehicles, including the new aluminum-intensive 2015 Ford F-150 pick-up truck.”

Shipments of aluminum rolled products increased 7% in the second quarter of fiscal 2015 to 765 kilotonnes compared to 713 kilotonnes in the prior year.  For the fourth consecutive quarter, all four operating regions reported an increase in shipments year-over-year.

Shipment growth combined with higher aluminum prices drove a 17% increase in net sales for the second quarter of fiscal 2015 to $2.8 billion as compared to $2.4 billion for the second quarter of fiscal 2014.

Over the past three years, Novelis has invested significantly to capture growth in premium flat rolled products and enhance the sustainability of its products.  To date this fiscal year, the company has:

  • Expanded its recycling operations in Brazil and commissioned the world’s largest aluminum recycling facility inGermany;
  • Grown total shipments through the ramp-up of new rolling capacity in Korea and Brazil;
  • Become the only company able to produce automotive sheet in all three of the world’s major automobile producing regions – AsiaEurope and North America – with the opening of China’s first manufacturing facility for heat-treated aluminum automotive sheet.

“These achievements further demonstrate that Novelis is the global leader in aluminum recycling and the aluminum partner-of-choice for automakers around the world,” said Martens.  “It’s an exciting time at Novelis as we continue to transform our business with a more sustainable focus on growing high recycled content premium products.”

(in $M)

Q2FY15

Q2FY14

9/30/2014

9/30/2013

Free Cash Flow

$(108)

$178

Capital Expenditures

126

184

Free Cash Flow before CapEx

$18

$362

The company reported negative free cash flow of $(108) million in the second quarter, after investing $126 million in capital expenditures to continue to grow the business. “The decrease in cash flow versus the prior year was primarily a result of rising aluminum prices and higher inventory levels during the start up phase of several of our expansions,” said Steve Fisher, Chief Financial Officer for Novelis.  “While the direction of aluminum prices is uncertain, we have plans in place to structurally reduce working capital and we continue to expect positive free cash flow by fiscal year end.”

At the end of the second quarter, the company reported liquidity of $734 million.  In October, the Company amended and extended its asset based loan facility to provide further financial flexibility under more favorable terms.

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