Novelis Reports Fiscal Year 2013 Results

Demonstrates strong execution on strategic initiatives

• Net income of $241 million, excluding certain items
• Adjusted EBITDA of $961 million
• Liquidity of $760 million; took actions to further strengthen future liquidity levels
• Increased recycled content by 4 percentage points to 43 per cent for fiscal 2013
• Global expansions progressing well; successfully commissioned two strategic expansions

Novelis, the world leader in aluminium rolling and recycling, today reported net income attributable to its common shareholder of $202 million for fiscal 2013. Excluding tax-effected certain items, net income for fiscal 2013 was $241 million, compared to a net income of $218 million for fiscal 2012. Net income for the fourth quarter of fiscal 2013, excluding tax-effected certain items, was $80 million, representing a $55 million increase when compared to the same period in the prior year.

Adjusted EBITDA for fiscal 2013 was $961 million, compared to $1,053 million reported for the same period in 2012. The year-over-year decrease was mostly due to disruptions related to the ERP implementation in two North American plants in the third quarter, pricing pressures in several operating regions, lower average aluminium prices, an impact from a fire at a North American plant in the fourth quarter and higher pension expense. Adjusted EBITDA for the fourth quarter of fiscal 2013 was $240 million, representing a 3 per cent increase when compared to the $233 million reported for the same period a year ago, due primarily to stronger demand and good cost control.

“As expected, we saw a sequential recovery from our seasonally low third quarter, with EBITDA increasing 30 per cent,” commented Mr. Phil Martens, Novelis President and Chief Executive Officer, “driven by strong demand, good cost control and higher operating efficiencies. And despite multiple unexpected headwinds in the second half of the fiscal year, as a result of prudent actions and fiscal discipline, the company was able to achieve EBITDA of nearly $1 billion for the year. This was accomplished while commissioning two large-scale expansions, closing or divesting underperforming and non-core assets and making good progress on several ongoing global rolling, finishing and recycling expansions. I am proud of our accomplishments this year as we produced solid results in a transformational year marked by heavy investment.”

The company noted a number of significant accomplishments in fiscal 2013:

• Record capital investment in the business of $775 million, primarily geared at major global rolling, finishing and recycling expansions for its key products segments of can, automotive and specialties.
• Solid liquidity of $760 million for fiscal 2013 despite its aggressive capital expenditure program. The company will continue its significant investment program, with planned capital expenditures between $700 to $750 million for fiscal year 2014. As a result of these investments and to provide additional flexibility, the company took actions to amend its ABL facility, which will allow it to further strengthen its liquidity. Had this transaction closed in the fourth quarter of fiscal 2013, liquidity would have been approximately $950 million.
• Increased the recycled content in its products by 4 percentage points to 43 per cent for fiscal 2013 making good progress toward the company's goal of having 80 percent recycled content in its products by 2020.
• Continued optimisation of the company's footprint and product portfolio, including the sale of three foil plants in Europe, the closure of a plant in Canada and shutdown of a smelter pot line in Brazil.
• Made significant headway on all strategic expansions; began the commissioning process for the Brazil rolling expansion and Korea recycling centre and is on track with all other rolling, finishing and recycling expansions.

"This is a heavy investment period for us that is necessary to maintain and grow our leadership position in the industry," said Mr. Martens. "Fiscal 13 was a transitional year much like fiscal 14 will be. We are very pleased with the execution on all of our expansion projects and are looking forward to capitalising on the significant growth we see ahead in our key end-markets of can, automotive and specialties."

Shipments of aluminium rolled products totalled 2,786 kilotonnes for fiscal 2013, down slightly compared to shipments of 2,838 kilotonnes for the same period last year due mostly to the sale of the company's three foil plants in Europe and production disruptions in North America. Shipments of aluminium rolled products totalled 698 kilotonnes for the fourth quarter of fiscal 2013, essentially flat compared to shipments of 703 kilotonnes for the same period last year.

Net sales for fiscal 2013 were $9.8 billion, an 11 per cent decrease compared to the $11.1 billion reported in the same period a year ago. This decline was due to lower average aluminium prices and lower shipments when compared to last year. For the fourth quarter, sales were $2.5 billion compared to $2.6 billion reported for the fourth quarter of fiscal 2012.

For fiscal 2013, Novelis reported liquidity of $760 million. “Despite our substantial capital expenditure program, we reported solid liquidity in the quarter,” said Mr. Steve Fisher, SVP and Chief Financial Officer of Novelis. Free cash flow was a negative $565 million for fiscal 2013, primarily due to capital expenditures of $775 million and negative changes in working capital. “This was a peak investment year for Novelis. We are effectively deploying a significant amount of capital to drive strong future returns.”