Record Automotive Shipments and Solid Execution Deliver Strong Quarterly Results
Third Quarter Fiscal Year 2016 Highlights
- Net income of $6 million; excluding special items, net income $32 million
- Excluding metal price lag, Adjusted EBITDA increased 4% YoY to $238 million
- Record automotive shipments up 52% YoY
- Global FRP shipments of 779 kilotonnes, up 3% YoY
Novelis, the world leader in aluminum rolling and recycling, today reported net income of $6 million for the third quarter of fiscal year 2016. Excluding tax-effected special items, the company reported net income of $32 million in the third quarter of fiscal 2016 compared to $54 million in the third quarter of fiscal 2015.
Excluding the impact of metal price lag in both quarters, Adjusted EBITDA was $238 million in the third quarter of fiscal 2016, up four percent compared to $228 million in 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 as compared to the prior year. Current year results also reflect higher fixed costs associated with new automotive and recycling operations.
“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 Steve Fisher, President and Chief Executive Officer for Novelis. “The success of our expansion projects coupled with our steady improvement in operational performance positions Novelis for continued growth and profitability.”
Shipments of rolled aluminum products grew three percent to 779 kilotonnes in the third quarter of fiscal 2016, as compared to 757 kilotonnes reported in the prior year period. Despite higher shipments, revenues decreased 17 percent to $2.4 billion for the third quarter of fiscal 2016 driven by significantly lower average aluminum prices and local market premiums.
While average local market metal premiums stabilized during the third quarter of fiscal 2016, the company reported negative metal price lag of $26 million as it continued to turn higher average metal 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. Adjusted EBITDA for the third quarter of fiscal 2016 including metal price lag was $212 million.
The company reported negative $12 million of free cash flow in the third quarter of fiscal 2016 as compared to negative $12 million in the third quarter of fiscal 2015. Capital expenditures totaled $78 million in the third quarter of fiscal 2016, down from $104 million reported in the prior year period. The company continues to expect positive free cash flow for the full fiscal year, and capital expenditures slightly below $400 million in fiscal 2016.
As of December 31, 2015, the company reported solid liquidity of $946 million.
Third Quarter of Fiscal Year 2016 Earnings Conference Call
Novelis will discuss its third quarter of fiscal year 2016 results via a live webcast and conference call for investors at 8:00 a.m. ET on Tuesday, February 9, 2016. To view slides and listen only, visit the web at https://cc.callinfo.com/r/1jziyt410jabm&eom. To join by telephone, dial toll-free in North America at 800 918 9478, India toll-free at 0008008521493 or the international toll line at +1 303 223 0117. Presentation materials and access information may also be found at novelis.com/investors.
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