Novelis’ adjusted EBITDA decrease year over year despite increase in shipments

Atlanta-based aluminum recycling and rolling company Novelis Inc. has reported results for the second quarter of its 2025 fiscal year, which ends May 31, 2025.

For the recently completed quarter, Novelis posted net income attributable to the company’s common shareholder of $128 million, down 18 percent year over year, while net income attributable to its common shareholder excluding special items was $179 million, down 1 percent year over year.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $462 million, a 5 percent decrease from the same period in its 2024 fiscal year. However, when the negative $25 million net impact from flooding the company experienced at its plant in Sierre, Switzerland, is excluded, the figure is 1 percent higher than in the second quarter of its 2024 fiscal year.

Its rolled product shipments totaled 945,000 metric tons, 1 percent greater than in the same quarter in 2024, for adjusted EBITDA per metric ton shipped of $489, 6 percent lower than last year.

Net sales for the second quarter of fiscal year 2025 increased 5 percent versus the prior-year period to $4.3 billion, mainly driven by higher average aluminum prices and a 1 percent increase in total flat-rolled product shipments to 945,000 metric tons. Strong demand for Novelis’ beverage packaging sheet was offset mainly by lower shipments to some specialty end markets and lower automotive shipments primarily arising from the impact of the flooding-related production interruption at the company’s Sierre plant during the second quarter of this year.

In the second quarter of its 2025 fiscal year, Novelis incurred $61 million in charges associated with the production interruptions at Sierre following the June 30 flood, as well as higher restructuring and impairment expenses and lower operating performance, partially offset by a favorable change in metal price lag and unrealized derivatives year over year.

This follows fixed asset charges of $30 million and inventory charges of $10 million during the first quarter of the company’s 2025 fiscal year, for total recognized charges of $101 million, including fixed asset and inventory charges, idle fixed costs, repairs and cleanup costs and excess costs to fulfill customer contracts. Production at the facility has been partially restored as of late September and is expected to return to normal production capability in the third quarter. Novelis says it continues to estimate the total net cash impact from the event, after insurance, at $80 million. The net impact to adjusted EBITDA is estimated to be $30 million, of which $25 million is estimated to have occurred in the second quarter.

Novelis attributes its 5 percent decrease in adjusted EBITDA primarily to less favorable metal benefit given the relatively rapid increase in aluminum scrap prices, which the company says was driven by increasing demand for aluminum scrap primarily from China, unfavorable product mix and a $25 million impact at Sierre from the flood. These factors were partially offset by higher beverage packaging shipments.

Net cash flow provided by operating activities was $374 million in the first six months of fiscal year 2025 compared with $290 million in the prior fiscal year’s second quarter, with a positive impact from favorable changes in working capital. Adjusted free cash flow was an outflow of $345 million in the first six months of fiscal year 2025, higher than outflow of $300 million one year ago with higher capital expenditures partially offset by higher cash flow from operating activities.

Total capital expenditures were $717 million for the first six months of fiscal year 2025, a 16 percent increase versus the prior-year period, primarily attributed to strategic investments in new rolling and recycling capacity under construction, most notably in Bay Minette, Alabama, Novelis says.

Novelis says the $4.1 billion rolling and recycling facility in Bay Minette is expected to begin commissioning in the second half of the 2026 calendar year. It will have an anticipated 600,000 metric tons of total finished good capacity upon completion, with approximately 420,000 metric tons targeted to beverage packaging, which is fully contracted, and 180,000 metric tons of capacity targeted primarily for automotive and specialties production.

The company’s Guthrie, Kentucky, automotive recycling center is in its initial production and ramp-up phase as of the second quarter. Novelis broke ground at the site in May 2022 and will be able to cast 240,000 tons of sheet ingot per year for its automotive customers. The site is adjacent to Novelis' existing automotive finishing plant in Guthrie.

"We are more focused than ever on diligently managing the balance sheet as we continue to progress the growth investments we have underway and navigate shifting market dynamics," said Devinder Ahuja, executive vice president and chief financial officer, Novelis.

"Our global footprint allowed us to achieve record beverage packaging shipments in the quarter and also mitigate the impact to customers from the flooding-related outage at Sierre," Novelis President and CEO Steve Fisher says. "We also remain committed to sustainability and our goal of becoming carbon neutral by 2050. Our recently released fiscal year 2024 sustainability report highlighted the progress against this target and the 63 percent average recycled content rate in our products—a leading figure for the industry. Our success in these areas is the result of innovative approaches and technologies and strong relationships with our customers who increasingly demand high-recycled content, lower-carbon aluminum products.”