Novelis’ net sales down in Q1
Novelis Inc., reported results for the first quarter of fiscal year 2024.
“Novelis’ diverse product portfolio and lower input costs delivered another sequential increase in quarterly Adjusted EBITDA and a higher Adjusted EBITDA per tonne than expected, even as inventory reduction activity across the beverage packaging supply chain continued in the quarter,” said Steve Fisher, President and CEO, Novelis Inc.
“We believe this can destocking activity is nearly complete, and remain focused on strengthening and expanding Novelis’ capabilities to support our customers’ growing demand for sustainable aluminium sheet.”
Net sales decreased 20% versus the prior year period to $4.1 billion for the first quarter of fiscal year 2024, primarily driven by lower average aluminium prices and a 9% decrease in total flat rolled product shipments to 879 kilotonnes, partially offset by increased product pricing and favourable product mix.
The decrease in shipments is mainly due to lower beverage can shipments, as well as unfavourable economic conditions impacting some specialties markets, mainly in building & construction.
However, demand for premium automotive sheet remains strong and led to record automotive shipments in the quarter.
Net income attributable to our common shareholder decreased 49% versus the prior year to $156 million in the first quarter of fiscal year 2024, due mainly to lower Adjusted EBITDA, higher interest expense, and significantly higher gains on unrealised derivatives in the prior year that did not recur.
Adjusted EBITDA decreased 25% versus the prior year to $421 million in the first quarter of fiscal year 2024, primarily driven by lower shipments, cost inflation, and less favourable metal benefit from recycling. These factors were partially offset by higher product pricing and favourable product mix.
Adjusted Free Cash Flow was an outflow of $349 million in the first quarter of fiscal year 2024, higher than the prior year period outflow of $73 million due primarily to a planned three-fold increase in capital expenditures as we ramp up strategic investments in new rolling and recycling capacity, and lower Adjusted EBITDA.
The company had a net leverage ratio (Net Debt / TTM Adjusted EBITDA) of 2.7x at the end of the first quarter of fiscal year 2024.
“We expect a steady recovery in shipments to drive continued improvement in Adjusted EBITDA over the remainder of this fiscal year,” said Devinder Ahuja, Executive Vice President and Chief Financial Officer, Novelis Inc.
“This will enable continued capital deployment in support of our growth investments underway to meet growing customer demand.”
The company had a strong Total Liquidity position of $2.4 billion, consisting of $1.0 billion in cash and cash equivalents and $1.4 billion in availability under committed credit facilities, as of June 30, 2023.