Novelis reports record automotive sheet shipments

Aluminum company says it had record performance in 3Q of fiscal 2017

Atlanta-based Novelis, an aluminum rolling and recycling company, has reported net income attributable to its common shareholder of $63 million for the third quarter of fiscal year 2017, ended December 31, 2016, compared with net income of $6 million in the third quarter of the prior fiscal year. Excluding tax-effected special items in both periods, the company says it more than doubled third quarter fiscal 2017 net income to $67 million from $32 million in the prior year. Current year net income reflects record adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and an 18 percent reduction in interest expense, a result of the refinancing of two senior note issuances during the second quarter of fiscal 2017, Novelis reports.

"Continued operational efficiencies combined with strong aluminum automotive sheet demand and strategic capacity investments delivered record, sustainable adjusted EBITDA results this quarter," says Steve Fisher, Novelis president and CEO.

Adjusted EBITDA for the third quarter of fiscal 2017 increased to $251 million from $212 million in the prior year’s third quarter. Excluding metal price lag in both periods, adjusted EBITDA increased 7 percent to a third quarter record of $255 million, driven by higher automotive sheet shipments, productivity gains, lower metal cost and favorable foreign exchange gains, Novelis says.

Overall, Novelis says it experienced a 4 percent decline in total shipments of rolled aluminum products to 750 kilotonnes, mainly due to prior strategic decisions to reduce volumes in China and soft demand in South America. Lower shipments, partially offset by slightly higher average aluminum prices and increased shipments of higher conversion premium products, led to a 2 percent decrease in net sales to $2.3 billion for the third quarter of fiscal 2017.

The company generated $131 million of free cash flow for the third quarter of fiscal 2017 as compared with negative $12 million in the prior year driven by stronger adjusted EBITDA results, as well as lower interest and capital expenditures. In light of the recent bond refinancing, no bond interest payments were made in the third quarter this fiscal year. Capital expenditures declined to $48 million as compared with $78 million in the third quarter of fiscal 2016. The company says it expects full year fiscal 2017 free cash flow to be on the high end of its previously guided range of $300 million to $350 million.

"Following our successful bond refinancing during the second quarter, we refinanced our $1.8 billion term loan with Asian banks in January," says Devinder Ahuja, Novelis senior vice president and chief financial officer. "Together, these bond and term loan transactions will result in an extended debt maturity profile and annual cash interest savings of approximately $80 million."

As of December 31, 2016, Novelis reported a liquidity position of more than $1 billion. Novelis operates in 10 countries, has approximately 12,000 employees and reported $10 billion in revenue for its 2016 fiscal year. The company supplies aluminum sheet and foil products to the transportation, packaging, construction, industrial and consumer electronics markets throughout North America, Europe, Asia and South America.

Novelis is a subsidiary of Hindalco Industries Ltd., a leader in aluminum and copper and the metals flagship company of the Aditya Birla Group, a multinational conglomerate based in Mumbai.