History has a way of repeating itself for Novelis; and this time, it has done so in barely a year. During the second quarter of FY2025, Novelis endured financial and operational stress due to a severe flood at its Sierre plant in Switzerland. Cut to Q2 FY2026, Novelis again finds itself in a similar situation due to a fire outbreak at its Oswego plant in New York. While the timing of the incident was just two weeks before the quarter-end, it reflected not much effect on its Q2 financial results. But Novelis and its parent company Hindalco are embracing a negative impact on cash flow by about USD 550-650 million for FY2026, which also includes an estimated adjusted EBITDA loss of USD 100-150 million - a figure that signals the gravity of the operational disruption.
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The Oswego plant, currently halted, is among Novelis’ key assets with an annual production capacity of 400,000 tonnes, notably higher than the 250,000 tonnes capacity of the Swiss Sierre plant that was forced offline for three months due to flooding last year. Novelis anticipates a similar timeline for Oswego’s recovery, expecting operations to resume by December 2025. The magnitude of financial stress could be similar or more, considering the larger capacity of Oswego. Consequently, the financial loss could escalate proportionally, making each week of downtime significantly more expensive. For the repairing of Sierre plant last year, Novelis reported a net expenditure of USD 21 million, in addition to USD 61 million in flood-related charges.
A strong quarter, shadowed by uncertainty ahead
At the close of the September 2025, Novelis’ financial numbers look like this:
- Net income: USD 163 million – up by 26.36 per cent Y-o-Y
- Adjusted EBITDA: USD 422 million – down by 9 per cent Y-o-Y
- Rolled product shipments: 941,000 tonnes
- Net sales: USD 4,744 million, up by 10.5 per cent Y-o-Y
Also read: Novelis accelerates repairs at fire-damaged Oswego plant-plans to restart this year
Here’s a brief analysis of this result. Novelis’ net income growth in Q2 2025 was primarily driven by favourable metal pricing, resulting from rising average local market aluminum premiums. Rise in net sales, supported by steady shipments of 941,000 tonnes valued USD 1,904 million, also contributed to higher net income. In addition, the company benefited from reduced restructuring expenses, compared to the prior year when it had incurred USD 116 million in impairment and restructuring charges, with USD 85 million spent in Q1 alone due to the Sierre flood.
Yet, beneath the strong revenue and net income growth, a softer Adjusted EBITDA reveals operational headwinds and margin pressures. President and CEO Steve Fisher described the quarter as performing “in line with expectations,” with “sequential improvement” across key metrics.
However, that optimism is now tempered by the uncertainty surrounding Q3 FY2026 — a period that will fully capture the impact of the Oswego fire.
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Can Novelis withstand a repeat damage?
Although Novelis projects long-term resilience, backed by robust demand for aluminium rolled products, the upcoming Bay Minette facility, and ongoing cost efficiency programmes, the possibility of near-term strain on cash flow and earnings cannot be ignored, especially after the pattern seen last year due to the damage caused by Sierre flood.
The US-based aluminium rolling company had ended the quarter (Q2 FY2025) with an 18 per cent decline in net income to USD 128 million. USD 61 million in charges associated with the production interruption was directly help responsible for the drop in net income. Adjusted EBITDA was down by 5 per cent during the period to USD 462 million, which was also attributed to the impact of Sierre flood.
If the Oswego disruption follows a similar trajectory, the financial toll could be significantly higher given the larger scale of operations. On November 6, Hindalco’s shares dropped sharply by 7 per cent following the announcement of Q2 results by its subsidiary firm Novelis and the projection of a negative free cash flow impact of USD 550-650 million.
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