For the fourth quarter, Novelis Inc.’s net income attributable to its common shareholder increased 22 percent versus the prior year to $215 million, while net income from continuing operations increased 21 percent to $217 million. Excluding special items in both years, fourth quarter fiscal year 2022 net income from continuing operations increased 10 percent versus the prior year to $189 million.
For the full year, fiscal 2022 net income attributable to its common shareholder increased more than four-fold versus the prior year to $954 million, while net income from continuing operations more than doubled to $1.0 billion. Excluding special items in both years, fiscal year 2022 net income from continuing operations increased 66 percent to $934 million, driven mainly by higher Adjusted EBITDA.
“We achieved record full year results and crossed notable financial milestones for Adjusted EBITDA and net income, reflecting a continued focus on meeting strong customer demand for infinitely recyclable aluminum products while striving to advance our business and industry toward a more circular economy,” said Steve Fisher, president and chief executive officer, Novelis, Inc. “Our market leading position, strong underlying market demand, and history of success adding new capacity position us to embark on our next phase of strategic expansion to support our customers for the long term, and deliver on our purpose of shaping a sustainable world together by reducing carbon emissions across the supply chain.”
Q4 Fiscal Year 2022 Highlights
•Net income from continuing operations of $217 million, up 21 percent YoY; net income from continuing operations excluding special items was $189 million, up 10 percent year over year
•Record shipments of 987 kilotonnes, up from 983 kilotonnes prior year
•Adjusted EBITDA of $431 million, down 15 percent year over year primarily due to short-term operational cost challenges
Full Fiscal Year 2022 Highlights
•Record net income from continuing operations of $1.0 billion, up 122 percent year over year; net income from continuing operations excluding special items was $934 million, up 66 percent year over year
•Record shipments of 3,858 kilotonnes, up 7 percent year over year
•Record Adjusted EBITDA of $2.0 billion, up 19 percent year over year; Adjusted EBITDA per ton shipped reached $530, up 12 percent year over year
•Net leverage ratio improved to 2.2x, compared to 2.9x as of March 31, 2021
Fourth Quarter Fiscal 2022 Results
Net sales increased 34 percent to $4.8 billion for the fourth quarter of fiscal year 2022, compared to $3.6 billion in the prior year period, primarily driven by higher average aluminum prices and local market premiums. Total flat rolled product shipments were a record 987 kilotonnes, a slight increase over prior year shipments of 983 kilotonnes, driven by strong beverage can and aerospace shipments offsetting lower automotive shipments impacted by semiconductor shortages in the automotive industry.
Adjusted EBITDA of $431 million in the fourth quarter of fiscal year 2022 included approximately $55 million of higher operational costs, primarily in North America, as a result of production and logistics challenges that are not expected to continue in fiscal 2023. The current year quarter also included a $15 million non-recurring regulatory provision. Other higher inflationary cost pressures were largely offset by favorable product pricing.
Full-Year Fiscal 2022 Results
Net sales increased 40 percent to $17.1 billion in fiscal year 2022, compared to $12.3 billion in fiscal year 2021, primarily driven by higher average aluminum prices and record shipments in every product end market. Total flat rolled product shipments increased 7 percent over the prior year to 3,858 kilotonnes, driven by strong demand for sustainable, flat rolled aluminum sheet and recovery from COVID-related production shutdowns early in the prior fiscal year.
Adjusted EBITDA increased 19 percent to a record $2.0 billion in fiscal year 2022, compared to $1.7 billion in fiscal year 2021. The increase in Adjusted EBITDA is primarily due to higher volume, favorable product mix despite constrained automotive shipments impacted by the semiconductor chip shortage this year, and a strong demand environment benefiting pricing, partially offset by high inflation and operational disruptions. Adjusted EBITDA per ton shipped increased to $530 in fiscal year 2022, compared to $474 in fiscal 2021.
Adjusted free cash flow from continuing operations was $649 million in fiscal 2022, after absorbing more than $400 million of increased working capital pressure from rising aluminum prices, net of metal price lag, compared to the prior year free cash flow of $740 million. The company’s net leverage ratio (net debt / TTM Adjusted EBITDA) improved to 2.2x at the end of fiscal year 2022, compared to 2.9x at the end of fiscal year 2021.
“Our record operational and financial performance in fiscal 2022 drove a reduction in net leverage to well within our targeted range and provides a solid footing to begin our next wave of transformational investments,” said Devinder Ahuja, Executive Vice President and Chief Financial Officer, Novelis, Inc. “We are well positioned to navigate current inflationary headwinds and global supply chain challenges, while keeping our focus on expanding capacity to support growing long term customer demand across end markets.”
We have an attractive opportunity to expand rolling and recycling capacity as a critical partner to customers’ growing demand for sustainable aluminum products. We are considering a number of potential capital investment opportunities over the next five years, spanning regions and end markets. This includes our plans, announced in a separate press release today, to commence construction of an approximately $2.5 billion, fully integrated greenfield rolling mill in Bay Minette, Alabama, U.S., to support strong demand for sustainable, beverage can and automotive aluminum sheet. Other previously announced U.S. projects include Oswego hot mill debottlenecking and the construction of a state-of-the art, automotive recycling center in Guthrie, while in Asia, we are expanding recycling and casting in Ulsan, South Korea, and integrating our automotive business in Asia with the addition of a new cold mill and automotive recycling center in China.
Novelis ended fiscal year 2022 with strong total liquidity of $2.6 billion as of March 31, 2022.
First Quarter Fiscal Year 2023 Outlook
Market demand remains broadly favorable and non-recurring items from fourth quarter fiscal year 2022 are behind us. We expect first quarter fiscal year 2023 Adjusted EBITDA per ton to return to levels above $500 per ton, even as we navigate continuing impacts from semi-conductor shortages, customer impacts from COVID lockdowns in China, global supply chain challenges and elevated energy costs.