Novelis Q1 Results: Operating Income Rises 19% To $500 Million

Hindalco Industries Ltd.'s subsidiary Novelis Inc. reported an adjusted Ebitda of $500 million in the first quarter of financial year 2025. This marked a 19% annual uptick, which was mainly driven by higher volumes and favorable product pricing, as per the company's press release.

The aluminum products manufacturer's net income attributable to common shareholders was down 3% year-on-year to $151 million, due to initial charges associated with flooding at the firm's Switzerland plant, as well as higher restructuring and unfavorable metal price lag.

The net income attributable to common shareholders excluding the special items stood 32% higher at $204 million.

• Net sales up 2% to $4.2 billion.

• Adj. Ebitda up 19% at $500 million.

• Adj. Ebitda per tonne shipped rose 10% to $525.

• Net income attributable to shareholders down 3% at $151million.

• Net income excluding items up 32% at $204 million.

The company's sales growth in the first quarter was mainly driven by higher aluminium prices, as well as higher total shipments. Novelis' rolled product shipments saw an 8% year-on-year growth at 951 kilo tonnes in Q1.

Higher growth was mainly driven by normalised demand for aluminum beverage packaging. Growth in shipments was mainly lead by South America and Asia, where shipments grew 29% and 19% year-on-year, respectively.

Novelis' Q1 Ebitda per tonne stood at $525, compared to $479 a year ago. This was mainly led by growth in shipments as well as improvement in product pricing and a $22 million positive change due to forex, as per Nuvama Research.

However it is key to note that the company's management has guided for an adverse impact to adjusted Ebitda in the second quarter, due to the flooding incident at the company's Switzerland plant at the end of June 2024. The company has already recognised $30 million in fixed asset charges in Q1 and expects an impact of $30 million more.

Novelis expects FY25 capex to be on the lower end of the range of $1.8 billion to $2.1 billion. The company has already spent $348 million in capex in the April-June quarter, which were primarily attributed to strategic investments in new rolling and recycling capacity currently under construction.

The company's total liquidity position stands at $2.2 billion, which includes $886 million in cash and cash equivalents and $1.3 billion available under committed credit facilities.