Novelis reports record performance in Q3 of fiscal 2021

Atlanta-based aluminum producer Novelis Inc. has reported, on a consolidated basis, record earnings before interest, taxes, depreciation and amortization (EBITDA) per ton shipped of $537 in the third quarter of its 2021 fiscal year, ended Dec. 31, 2020, compared with $430 in Q3 of the prior year.

During the quarter, net sales increased 19 percent from the prior-year period to $3.2 billion, primarily driven by a 17 percent increase in total shipments and higher average aluminum prices. Total flat-rolled product shipments increased to 933,000 metric tons, mainly reflecting the addition of the acquired Aleris business and strong demand across product end markets, particularly beverage can, the company says.

Excluding tax-effected special items in both years, third-quarter fiscal 2021 net income was a record-high $209 million, up 58 percent versus the prior-year period, driven mainly by higher after-tax adjusted EBITDA, partially offset by higher depreciation and amortization associated with the acquisition of Aleris, the company says.

Adjusted EBITDA increased 46 percent to $501 million in the third quarter of fiscal 2021 compared with $343 million in the prior-year period. The increase in adjusted EBITDA is the result of organic growth, favorable metal benefits and a net $50 million positive EBITDA contribution from the purchase of Aleris, the company reports.

"Novelis achieved record financial performance in the third quarter based on continued demand for innovative, sustainable aluminum solutions and outstanding operational performance across our expanded business," says Steve Fisher, president and CEO, Novelis Inc. "We are also making excellent progress on our strategic growth initiatives to drive long term value by investing in new capacity and technology, entering new partnerships to solidify aluminum as the material of choice for our customers and bringing new alloys to market that will drive the industry forward."

Novelis says its capital expenditures for the quarter of $333 million were down 23 percent versus the prior year as spending is prioritized to support maintenance activities and organic, strategic capacity projects underway. The greenfield Guthrie, Kentucky, automotive finishing plant shipped its first customer coils in December, while the new automotive finishing line in Changzhou, China, is expected to start commercial production in the fourth quarter the company's 2021 fiscal year. The recycling, casting and rolling expansion in Brazil remains on track to commission in the middle of fiscal year 2022, according to the company.   

Customer demand has recovered to pre-COVID levels in most end markets, Novelis says, adding that the company will continue to work closely with customers to leverage its global manufacturing footprint and adjust production levels to meet their needs.

Novelis closed on its acquisition of Aleris Corp. April 14, 2020. The company says it is integrating the two companies to drive a number of strategic benefits and allow for at least $180 million in potential annual synergies.

Related to this purchase, Novelis completed the required divestment of its Lewisport, Kentucky, automotive body sheet business Nov. 30, 2020, to New York City-based American Industrial Partners, a private equity firm. Upon closing, Novelis received $180 million in cash proceeds.

The required divestment of the plant in Duffel, Belgium, was completed in September 2020.

The company says its purchase of Aleris provides strategic benefits, namely securing an integrated manufacturing footprint in China, further portfolio diversification with the addition of aerospace and building and construction, as well as new technology and operational capabilities.

Novelis is a subsidiary of Hindalco Industries Ltd., an industry leader in aluminum and copper and the metals flagship company of the Aditya Birla Group, a multinational conglomerate based in Mumbai, India.