Novelis sees increase in net sales in Q3 of fiscal 2025

Atlanta-based Novelis Inc. has reported its third quarter of fiscal year 2025 financial results, posting adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $367 million, a year-over-year decrease of 19 percent. The company’s rolled product shipments totaled 904,000 metric tons, a 1 percent decrease compared with results for the prior-year period. Adjusted EBITDA per metric ton shipped was $406 per metric ton, 19 percent less than in the third quarter of its 2024 fiscal year.   

Aluminum rolling and recycling company 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.

Additional Q3 fiscal year 2025 financial highlights

Net sales for the third quarter of fiscal year 2025 increased 4 percent versus the prior-year period to $4.1 billion, which the company attributes to higher average aluminum prices as total rolled product shipments of 904,000 metric tons largely are comparable to the prior-year period. Beverage packaging sheet demand remained strong but was offset by lower automotive and specialty shipments.

Net income attributable to our common shareholder decreased 9 percent versus the prior year to $110 million, while net income attributable to the common shareholder, excluding special items, was down 32 percent year over year to $119 million. The decreases in net income attributable to the common shareholder, excluding special items, and adjusted EBITDA primarily are driven by higher aluminum scrap prices and unfavorable product mix.  

In its presentation that accompanied its quarterly financial results, Novelis says it is developing technologies and partnerships to expand the availability of recycled inputs and that cost and operational initiatives are underway to help mitigate scrap pressures

Net cash flow provided by operating activities totaled $263 million in the first nine months of fiscal year 2025 compared with $420 million in the prior-year period primarily because of lower net income and unfavorable changes in working capital. Adjusted free cash flow was an outflow of $915 million in the first nine months of fiscal year 2025, higher than the prior-year period outflow of $517 million given higher capital expenditures and lower cash flow from operating activities. Total capital expenditures were $1.2 billion for the first nine months of fiscal year 2025, a 22 percent increase versus the prior-year period, which they company attributes to strategic investments in new rolling and recycling capacity under construction, most notably in the U.S. for Bay Minette, Alabama, its greenfield 600,000 metric ton recycling and rolling plant.

In terms of its other investment projects, the company’s presentation notes its Guthrie, Kentucky, recycling center continues to ramp up its automotive sheet ingot casting, while its Ulsan Aluminum recycling center casting expansion in Ulsan, South Korea, began commissioning and its Logan, Kentucky, hot mill expansion to debottleneck the site’s 80,000 metric tons of capacity is on track for commissioning in the first quarter of its 2026 fiscal year.

"Novelis is leading the industry in first-mover investments to capture growing market opportunities," says Devinder Ahuja, executive vice president and chief financial officer of Novelis. "We intend to fund those investments largely through internally generated cash flow while maintaining balance sheet discipline to ensure we stay in a net leverage ratio of approximately 3.5x during this strategic investment cycle."

RELATED: Novelis to increase recycled content to 75 percent

"We continue to see strong demand across our markets as customers increasingly ask for lower-carbon, higher-recycled-content aluminum solutions as a way to reduce their carbon footprint," Novelis President and CEO Steve Fisher says. "With a leading industry average of 63 percent recycled content in our products in our last fiscal year, Novelis has been a pioneer in using recycled inputs to drive down carbon emissions. As others have begun to follow suit, competition for scrap aluminum has intensified and is creating significant pressure on scrap pricing, which is impacting our financial results. We believe we are well-positioned to face these challenges and have operational and cost-efficiency initiatives underway to offset some of the pressures. At the same time, we are also developing new technologies that will allow us to expand the types of scrap inputs we can purchase for use in our system."

Summary

In its presentation, Novelis anticipates resilient market demand, with strong growth in beverage packaging expected to continue.

The company says its geographic and end-market presence offers a competitive advantage as it expects seasonally higher volume, more favorable product mix, the benefit of new contract pricing and favorable metal benefit to result in improved performance in the fourth quarter if its 2025 fiscal year compared with the third quarter, with results that will be more comparable to this it saw in the second quarter of its current fiscal year.