Novelis Reports Second Quarter Fiscal Year 2025 Results
Novelis, based in Atlanta, has released its financial results for Q2 FY2025. The company reported a net income of \$128 million, down 18% year-over-year. Excluding special items, net income was \$179 million, a 1% drop from the prior year. Adjusted EBITDA was \$462 million, down 5%, but up 1% excluding the \$25 million impact from Sierre flooding.
Rolled product shipments reached 945 kilotonnes, a 1% increase from the previous year. Adjusted EBITDA per tonne shipped was \$489, a 6% decline year-over-year.
Production at the Sierre plant, impacted by severe flooding in June 2024, has resumed. CEO Steve Fisher highlighted the company's global network helped achieve record beverage packaging shipments and mitigate customer impacts. He also reaffirmed Novelis’ goal of carbon neutrality by 2050 and a 63% average recycled content rate.
Net sales increased 5% to \$4.3 billion, driven by higher aluminum prices and a 1% rise in flat rolled product shipments. Strong demand for beverage packaging offset lower shipments to specialty and automotive sectors affected by the Sierre flooding.
Net income was impacted by \$61 million in Sierre-related charges, higher restructuring costs, and weaker operating performance, partially offset by favorable metal price lag and derivatives gains. Adjusted EBITDA was influenced by higher aluminum scrap prices, unfavorable product mix, and the Sierre flooding, offset by higher beverage packaging shipments.
Operating cash flow for the first half of FY2025 was \$374 million, up from \$290 million last year, due to favorable working capital changes. Adjusted free cash flow had a \$345 million outflow, compared to \$300 million previously, due to increased capital expenditures. Total capital expenditures were \$717 million, reflecting strategic investments in rolling and recycling capacity, notably in Bay Minette, U.S.
CFO Devinder Ahuja emphasized managing the balance sheet while advancing growth investments. Novelis ended the quarter with \$2.1 billion in liquidity, including \$1.1 billion in cash and \$1.0 billion in credit facilities.
On June 30, 2024, the Sierre facility in Switzerland experienced severe flooding. All employees were safely evacuated, but operations were significantly disrupted. Novelis recorded \$101 million in charges related to damages and repair costs. Insurance coverage is in place, and production was partially restored by the end of Q2 FY2025, with full recovery expected in Q3 FY2025. The estimated net cash impact after insurance is \$80 million, with a \$30 million impact to Adjusted EBITDA.
