Novelis Reports Second Quarter Fiscal 2022 Results

Novelis Inc., the world leader in aluminum rolling and recycling, has reported net income attributable to its common shareholder of $237 million in the second quarter of fiscal year 2022 compared to a net loss of $37 million in the prior year period. Net income from continuing operations increased to $239 million compared to $144 million in the prior year. Excluding special items in both years, second quarter fiscal year 2022 net income from continuing operations increased 54% to $244 million, driven mainly by higher EBITDA.

Net sales increased 38% to $4.1 billion for the second quarter of fiscal year 2022 compared to $3.0 billion in the prior year period, primarily driven by a 5% increase in shipments and higher average aluminum prices. Total flat rolled product shipments increased to 968 kilotonnes in the second quarter of fiscal year 2022 compared to 923 kilotonnes in the prior year period, mainly as a result of strong demand for sustainable aluminum beverage packaging and specialty products, partially offset by lower automotive shipments due to the global semiconductor chip shortage impacting the automotive industry.

Adjusted EBITDA increased 22% to $553 million in the second quarter of fiscal year 2022 compared to $455 million in the prior year period. The increase in Adjusted EBITDA is primarily due to higher volume and favorable metal benefits, partially offset by inflationary cost pressures. Novelis achieved a record Adjusted EBITDA per ton shipped of $571 in the second quarter of fiscal year 2022, compared to $493 in the prior year.

"Our diverse portfolio of high-recycled-content products allowed us to capture strong market demand and deliver another record quarter of EBITDA," said Steve Fisher, President and CEO, Novelis Inc. "While we navigate near-term supply chain challenges, we are actively seeking and implementing new investment opportunities to capture growing customer demand for sustainable, low-carbon aluminum solutions."

Novelis has recently announced plans to invest approximately $500 million in growth capital projects, including a $375 million investment to expand its rolling and recycling capabilities in Zhenjiang, China, and a $130 million investment at its Oswego plant in the US to increase hot mill capacity and enhance automotive sheet finishing capabilities.

Fiscal year-to-date free cash flow from continuing operations was $158 million compared to the prior year period $169 million. The primary driver for this reduction versus the prior year was higher working capital requirements due mainly to rising aluminum prices, mostly offset by higher Adjusted EBITDA and favorable metal price lag. The company's net leverage ratio (net debt / TTM Adjusted EBITDA) further improved to 2.4x at the end of the second quarter of fiscal year 2022, compared to 3.7x in the prior year period.

"Since announcing Novelis' long-term capital allocation framework earlier this year, we have reduced gross debt, improved net leverage to below our targeted 2.5x level, and returned $100 million of capital to our common shareholder," said Devinder Ahuja, Executive Vice President and Chief Financial Officer, Novelis Inc. "At the same time, we have maintained adequate liquidity to effectively manage the business' working capital needs, while also remaining strongly positioned to reinvest capital in new capacity and capabilities."

In August, Novelis successfully completed an offering of $750 million 3.25% Senior Notes due 2026 and $750 million 3.875% Senior Notes due 2031. Proceeds were used toward the redemption of all its outstanding 5.875% Senior Notes due 2026.

The company continues to maintain a strong total liquidity position of $2.1 billion as of September 30, 2021.

Shares of Hindalco Industries Limited was last trading in BSE at Rs. 472.95 as compared to the previous close of Rs. 478.15. The total number of shares traded during the day was 44129 in over 1364 trades.

The stock hit an intraday high of Rs. 485.00 and intraday low of 470.00. The net turnover during the day was Rs. 20975394.00.

Source : Equity Bulls

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HindalcoIndustriesLimited INE038A01020 HINDALCO NovelisInc