Novelis’ adjusted EBITDA up by 5% YoY in Q2 FY2020 on higher shipments

Novelis Inc., the world leader in aluminium rolling and recycling, released second quarter of fiscal 2020 results. The company reported net income of $123 million in Q2 FY2020, compared to $116 million in the prior year period. That was up 6% year-on-year. Excluding tax-effected special items, net income stood at $160 million, up 31% YoY on higher Adjusted EBITDA and a lower effective tax rate.

Adjusted EBITDA was $374 million in the second quarter of fiscal 2020, an increase of 5% year-on-year, primarily driven by higher shipments as well as favourable price and product mix. Results were partially offset by less favourable recycling benefits due to lower aluminium prices.

Net sales decreased 9% to $2.9 billion in Q2 FY2020, driven by lower average LME aluminium prices and local market premiums, partially offset by higher total shipments. Shipments of flat rolled products increased 3% to 835 kilotonnes.

"Our outstanding operational performance resulted in record second quarter shipments and strong financials, while we continue to make excellent progress on our strategic growth initiatives," said Steve Fisher, President and CEO, Novelis Inc. "Our customers continue to enhance their sustainability initiatives through more sustainable packaging, automotive closed-loop recycling systems, and adopting more recycled content into their products.”

The company reported $112 million of free cash flow in Q2 FY2020. On a year-to-date basis, fiscal 2020 free cash flow of $18 million includes a significant increase in capital expenditures YoY to $300 million.

"Strong financial performance allowed us to further improve our net leverage ratio during the quarter, despite a significant increase in strategic capital investments to meet growing demand for sustainable aluminium solutions," said Devinder Ahuja, Senior Vice President and Chief Financial Officer, Novelis Inc.