American Recycler News, Inc.


Novelis reports first quarter of fiscal year 2014 results

Novelis reported net income attributable to its common shareholder of $14 million for the first quarter of fiscal 2014. Excluding certain tax-effected items, net income for first quarter of fiscal 2014 was $21 million.

Adjusted EBITDA for the first quarter of fiscal 2014 was $204 million, compared to $259 million reported for the same period a year ago. This quarter’s results included a non-recurring $14 million amendment to the company’s employee Long-Term Incentive Plan. In addition, Novelis faced continued pricing headwinds and softer than expected demand for beverage can sheet partially driven by unfavorable weather conditions.

Shipments of aluminum rolled products totaled 708 kilotonnes for the first quarter of fiscal 2014, down two percent compared to shipments of 722 kilotonnes for the same period last year.

Net sales for the first quarter of fiscal 2014 were $2.4 billion compared to $2.6 billion reported for the first quarter of fiscal 2013. This decrease was primarily due to a seven percent decline in average aluminum prices, lower shipments, and lower conversion premiums.

Fiscal 2014 is a transitional year for Novelis as it begins the commissioning process of several strategic global expansions to support future demand for premium products in can, automotive and specialty markets.

  • In July, the company began the commissioning process at both its new hot and cold mills in Korea. This largely completes the $400 million investment in Korea to add approximately 350 kilotonnes of incremental rolling capacity, and 265 kilotonnes of recycling capacity that came online late last year.
  • Novelis also began the commissioning process at its two new automotive finishing lines in North America last month. The commissioning process for this approximately 240 kilotonne expansion will ramp up through the remainder of this fiscal year.
  • The company’s rolling expansion in Brazil continues to successfully accelerate production as expected with customer qualification largely complete.

For the first quarter of fiscal 2014, Novelis reported solid liquidity of $730 million. Free cash flow was a negative $289 million for the first quarter of fiscal 2014 and capital expenditures totaled $181 million. “As expected, we had negative cash flow in our first quarter primarily as a result of continued investment in our strategic expansions and $107 million in semi-annual bond interest payments,” said Steve Fisher, chief financial officer for Novelis. “We’ve made good progress reducing inventory levels at the end of the first quarter and are continuing to drive working capital efficiencies and take other actions to improve free cash flow going forward.”