Novelis Inc. a leader in aluminum rolling and recycling, reported record results for the fourth quarter and fiscal year 2018 with significant year-over-year increases in Adjusted EBITDA, net sales, net income, free cash flow and shipments.
This performance was driven by Novelis’ focused strategy to improve operational efficiencies, increase shipments of premium products, and make key investments to grow automotive capacity. Fiscal 2018 net income attributable to its common shareholder was $106 million for the fourth quarter and $635 million for the full year.
Excluding tax effected special items in both years, Novelis grew its fourth quarter fiscal 2018 net income 38 percent to $101 million, and increased full year net income by 80 percent to $420 million. This increase reflects a significant improvement in adjusted EBITDA, as well as lower interest expense, a result of the company’s long-term debt refinancing actions during fiscal 2017.
Key achievements in fiscal 2018 include:
•Completed a joint venture to establish Ulsan Aluminum by selling approximately 50 percent of its ownership of the Ulsan, South Korea plant, to Kobe Steel for $314 million;
•Announced plans to expand production in the US with an automotive finishing investment in Guthrie, Kentucky, adding approximately 200 kilotonnes of nameplate capacity;
•Agreed to acquire operating facilities and manufacturing assets in Sierre, Switzerland, that have been leased;
•Achieved record automotive sheet shipment levels to support new product launches including the Land Rover Velar, Jaguar I-PACE, Ford Expedition, Lincoln Navigator and Jeep Wrangler;
•Launched Novelis Advanz™ 6HF -e/s200 alloy in North America, a heat-treatable alloy that provides automakers greater design flexibility due to its superior formability, strength performance and weight savings;
•Increased recycled content from 55 percent to 57 percent for the full year.
By strengthening its automotive portfolio and making strategic investments to increase capacity, Novelis broadened its leadership position within the industry and is committed to developing next-generation high-strength, highly-formable 6xxx and 7xxx series alloys for future vehicle design. As projections for aluminum adoption increase, Novelis will continue to partner with OEMs to develop more aluminum based vehicle architecture from hang-on parts to complete structural aluminum-intensive bodies. As a result, the company will pursue significant growth opportunities from incremental aluminum adoption in niche premium cars as well as higher mass production mix-material vehicles.
Full Year Fiscal 2018 Results
Net sales grew 20 percent to $11.5 billion in fiscal 2018. The increase was driven by higher average aluminum prices, record shipments and increased shipments of higher conversion premium products. Total shipments of flat rolled products grew four percent to 3,188 kilotonnes. For fiscal 2018, the percentage of the company’s shipment portfolio stemming from automotive sheet grew to 20 percent, up from 18 percent in the prior year.
Adjusted EBITDA grew 12 percent to $1,215 million in fiscal 2018 compared to $1,085 million in fiscal 2017. The increase was driven by higher shipments and strong operational efficiencies, as well as favorable product mix, metal costs and currency impacts, partially offset by lower can prices.
Full year free cash flow increased 12 percent to $406 million in fiscal 2018 driven by stronger adjusted EBITDA and lower interest, despite significant working capital pressure from higher aluminum prices. Capital expenditures increased to $226 million as compared to $224 million in the prior year.
Published in the July 2018 Edition