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Informist, Wednesday, Nov. 6, 2024

--Hindalco arm Novelis Jul-Sept net income $128 mln vs $157 mln year ago

--Hindalco arm Novelis Jul-Sept net sales $4.30 bln vs $4.12 bln year ago

--Hindalco arm Novelis Jul-Sept adjusted EBITDA $462 mln, down 5% on year

--Hindalco arm Novelis Jul-Sept adjusted EBITDA/tn $489, down 6% on year

By Rajesh Gajra and Steffy Maria Paul

MUMBAI – Weak operational performance, partly due to costs on account of production interruptions at its Sierre plant in Switzerland, and other expenses, proved to be a drag on the bottom line performance of Hindalco Industries Ltd.'s US-based subsidiary Novelis Inc. in the quarter ended September. The top line fared better on the back of higher aluminium prices.

Novelis reported a fall of 18% on year in net income to $128 million in the September quarter. However, the net income, after excluding special items, was $179 million, down 1% on year. The net sales of the company increased 5% on year to $4.3 billion, and the volume of shipments of flat rolled products went up slightly by 1% on year to 945,000 tonnes. The adjusted earnings before interest, tax, depreciation, and amortisation declined 5% on year to $462 million. The adjusted EBITDA excluded a negative impact of $25 million from the Rhone river flooding event at the end of June which hit production at its factory in Sierre, Switzerland.

Novelis manufactures and sells rolled aluminium products to the beverage, packaging, automotive, aerospace, and other industries, across North America, South America, Europe, and Asia. The company contributes more than half of Hindalco's consolidated net profit and over 60% of the consolidated revenue.

Regarding the fall in its net income for the quarter, the company said, "the current year period includes $61 million in charges associated with the production interruptions at Sierre, as well as higher restructuring and impairment expense and lower operating performance, partially offset by a favourable change in metal price lag and unrealised derivatives year-over-year." The company said its adjusted EBITDA per tonne shipped was $489 for the quarter, down 6% on year.

The company said its increase in net sales for the quarter was driven largely by higher average aluminium prices and an increase in the total flat rolled product shipments. "Strong demand for beverage packaging sheet was mostly offset by lower shipments to some speciality end markets as well as lower automotive shipments due primarily (sic.) to the impact from the flooding-related production interruption at our Sierre, Switzerland plant during the second quarter this year," the company said. It added that production at the facility has been partially restored at the end of the latest quarter, and is expected to return to normal production capability in the next quarter. The company said it estimates the total net cash impact from this event, after insurance, to be $80 million. 

For the first six months of the current financial year, the company said its total capital expenditure was $717 million, up 16% on year, owing to investments in the new rolling and recycling capacity under construction, especially in the US for its Bay Minette project. The company expects the commissioning of the project to begin in the second half of 2026. 

On Wednesday, shares of Hindalco Industries closed at INR 708.20 on the National Stock Exchange, up 1.5%.  End

US$1 = INR 84.28

Edited by Tanima Banerjee

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