Novelis Inc., a sustainable aluminum solutions provider and a leader in aluminum rolling and recycling, reported results for the second quarter of fiscal year 2025.
“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,” said Steve Fisher, president and chief executive officer, Novelis Inc. “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.”
Second Quarter Fiscal Year 2025 Financial Highlights
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 kilotonnes. Strong demand for beverage packaging sheet was mostly offset by lower shipments to some specialty end markets as well as lower automotive shipments due primarily to the impact from the flooding-related production interruption at Sierre, Switzerland, plant during the second quarter this year.
Net income attributable to their common shareholder decreased 18 percent versus the prior year to $128 million in the second quarter of fiscal year 2025. The current year period includes $61 million in charges associated with the production interruptions at Sierre, as well as higher restructuring and impairment expense and lower operating performance, partially offset by a favorable change in metal price lag and unrealized derivatives year-over-year. Net income attributable to common shareholder, excluding special items, was down 1 percent year-over-year to $179 million.
Net cash flow provided by operating activities was $374 million in the first six months of fiscal year 2025 compared to $290 million in the prior fiscal year period, primarily due to 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 the prior year period outflow of $300 million due to higher capital expenditures and 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 the U.S. for Bay Minette.
The company had a total liquidity position of $2.1 billion, consisting of $1.1 billion in cash and cash equivalents and $1.0 billion in availability under committed credit facilities, as of September 30, 2024.
Sierre Flood Update
On June 30, 2024, the plant located in Sierre, Switzerland, was impacted by exceptional flooding caused by unprecedented heavy rainfall. All employees were safely evacuated; however, water entered the plant premises and plant operations were halted. During the six months ended September 30, 2024, the company recognized charges of $101 million resulting from this event, including fixed asset and inventory charges, idle fixed costs, repairs and clean-up costs, and excess costs to fulfill customer contracts. The plant is insured for property damage and business interruption losses related to such events, subject to deductibles and policy limits. Novelis will record an insurance receivable based on the anticipated insurance proceeds when they can be reliably estimated. Production at the facility has been partially restored at the end of the second quarter of fiscal 2025 and is expected to return to normal production capability in the third quarter of fiscal 2025. They continue to estimate the total net cash impact from this event, after insurance, to be $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.
Published December 2024