Novelis posts Q1 profit of $24 mln, overturning year-ago loss

Novelis reported a total income of $24 million in the first quarter of 2016 ending June 30. With the figures, the world leader in aluminium rolling and recycling has overcome a net loss $60 million it posted in the corresponding period previous year. Excluding tax-effected special items, the net income grew $24 million YoY to stand at $33 million in Q1 2017.

"Building on the momentum of a strong close to fiscal 2016, the 26 percent increase in Adjusted EBITDA excluding metal price lag reflects our heightened focus on manufacturing operations, driving productivity gains and asset efficiency while operating with a more complex, premium product portfolio," said Steve Fisher, President and Chief Executive Officer for Novelis. "In addition, we are better able to serve our customers, optimize our portfolio, and leverage our recycling capabilities as a result of the completion of our recent investment phase."

Novelis' Q1 adjusted EBITDA edged up to $255 million from $127 million YoY as a result of improvement in operations and significant reduction in negative metal price lag. The impact of the latter has moderated in the latest quarterly results due to reduced premiums volatility over the past several months. Metal price lag in Q1 2017 was negative $13 million, as compared to negative $85 million last year.

Adjusted EBITDA, excluding metal price lag in both periods, increased 26 per cent to $268 million. Novelis attributed the increase to higher productivity and lower costs associated with the start-up of new automotive finishing and recycling capacity in 2015. Shift to a more novel and favourable product mix, including a 15 per cent increase in automotive sheet shipments to record levels, has also been cited as a major reason behind this growth. These gains, however, were partially offset by a two per cent decline in total shipments of rolled aluminium products to 755 kilo tonnes. 

The company reported a thirteen per cent decline in net sales to $2.3 billion for Q1 2017. This was primarily driven by lower average aluminium prices and local market premiums, coupled with lower total shipments. This was partially offset by increased shipments of higher conversion premium products.

Novelis' free cash flow ran negative to $146 million in Q1 2017 as compared to negative $425 million in same period last year. As of June 30, 2016, the company reported a strong liquidity position of $1.1 billion.

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