Novelis reported net income of $29 million for the fourth quarter of fiscal year 2016. Excluding tax effected special items, the company reported net income of $50 million in the fourth quarter of fiscal 2016, a 35 percent increase over the prior year period.
For fiscal year 2016, the company recorded a net loss of $38 million. Excluding tax-effected special items, net income was $131 million for the full year.
Shipments of rolled aluminum products grew four percent to 788 kilotonnes in the fourth quarter of fiscal 2016. Despite higher shipments, revenues decreased 14 percent to $2.4 billion as a result of lower average aluminum prices and local market premiums.
Excluding the impact of metal price lag, Adjusted EBITDA was $277 million in the fourth quarter of fiscal 2016, up 29 percent compared to $214 million in the prior year. This increase was a result of record global shipments in a seasonally strong quarter, as well as positive product mix primarily driven by a 23 percent increase in automotive shipments over the prior year. The strong fourth quarter EBITDA improvement was also driven by excellent operational performance and favorable currency effects, resulting in the highest quarterly EBITDA since fiscal 2012. In addition, the company demonstrated operating leverage on record shipments achieving EBITDA per ton excluding metal price lag above $350, a 25 percent increase over the prior year.
The company reported negative metal price lag of $7 million in the fourth quarter of fiscal 2016 as compared to negative $13 million in the prior year period. Volatility in average local market metal premiums has greatly reduced over the last several months, lessening the impact of metal price lag on current results as expected. Adjusted EBITDA including metal price lag was $270 million, a 34 percent increase over $201 million in the prior year.
Higher shipments of beverage can and automotive sheet drove total flat rolled aluminum product shipments up two percent to 3,123 kilotonnes in fiscal 2016. For the full fiscal year, the percentage of the company’s shipment portfolio stemming from automotive sheet grew to 15 percent, up from eleven percent in the prior year. By the end of fiscal 2016, all five of the company’s recently constructed automotive finishing lines were producing and shipping automotive sheet products to customers. When all of these automotive finishing lines are fully utilized, automotive shipments will grow to approximately 25 percent of total shipments.
Revenues decreased eleven percent to $9.9 billion in fiscal 2016, as higher shipments were more than offset by a 16 percent decrease in average base aluminum prices and a 58 percent decrease in local market premiums.
Excluding the impact of metal price lag in both years, Adjusted EBITDA was $963 million in fiscal 2016, up seven percent compared to $896 million in fiscal 2015. The increase was driven by strong operational performance, higher total shipments, product mix benefits mainly the result of a 47 percent increase in automotive shipments, and favorable foreign exchange in Brazil. Current year results were partially offset by less favorable recycling benefits due to significantly lower aluminum prices as compared to the prior year, as well as general inflation and higher fixed costs associated with new automotive and recycling operations.
The company more than doubled its free cash flow as compared to the prior year, generating $160 million in fiscal 2016 after investing $370 million in capital expenditures.
Published in the July 2016 Edition of American Recycler News
