Novelis posts 2% sales growth for Q1 FY2025 owing to an increase in aluminium rolled product shipments

Novelis Inc., an American industrial aluminium company that has etched its name in flat-rolled product manufacturing and recycling, announced the first quarter results for FY2024-25, which ended June 30. The results revealed robust earnings growth, led by a double-digit increase in beverage packaging shipments.

As per the report, the company's net sales in Q1 rose 2 per cent over the year, amounting to $4.2 billion. Higher shipments and increased average aluminium prices jointly boosted the sales. Novelis' total flat-rolled product shipments surged 8 per cent to 951,000 tonnes from 879,000 tonnes in the previous year, primarily due to demand recovery for beverage packaging sheet, which was impacted earlier by customer inventory reduction activity.

Novelis' Q1 report indicates the company's adjusted EBITDA grew 19 per cent Y-o-Y from $421 million to $500 million. Net cash flow provided by operating activities was $74 million in the first three months of FY2024-24 compared to an outflow of $32 million during the corresponding period of the previous year, attributed to higher adjusted EBITDA and favorable changes in working capital. 

However, amid the growing sales and shipments, Novelis reported its net income dwindled by 3 per cent Y-o-Y from $156 million to $151 million, as a consequence of flooding at the Sierra plant in Switzerland at the end of June, as well as higher restructuring and unfavourable metal price lag. Nonetheless, the net income, excluding special items, was 32 per cent up Y-o-Y to $204 million.

In Q1, Novelis aimed to raise $945 million in a US IPO by selling 45 million shares for $18-21 each. This IPO listing is part of Hindalco's broader strategy to unlock value and raise capital through all its global subsidiaries. After the initial public offering, Hindalco will reduce its stake in Novelis by 7.5 per cent and retain almost 92.5 per cent of the ownership.

"Novelis delivered meaningful year-over-year improvement across a number of financial metrics in the quarter, led by a double-digit increase in beverage packaging shipments benefiting from normalized demand, our broad global presence and solid customer relationships. I commend our teams for staying focused on driving operational efficiencies and serving our customers, while at the same time continuing to advance organic growth projects underway as we strategically invest to capture strong mid- to long-term growth trends," said Steve Fisher, president and CEO, Novelis Inc."

Devinder Ahuja, executive vice president and CFO of Novelis Inc., said: "We continue to take a prudent approach to capital allocation, investing in our future while maintaining a disciplined net leverage position."

Novelis' total expenditure in Q1 FY2025 was $348 million, attributed to strategic investments in new rolling and recycling capacity under construction.

In July, Novelis announced an investment of approximately $90 million to expand its recycling capacity for used beverage cans (UBCs) at the Latchford plant. The investment encompasses the construction of a new dross house, three new bag houses, and the installation of cutting-edge shredding, sorting, de-coating, and melting technologies.