Novelis Q2 FY2024: Net sales declines 14.6% Y-o-Y but stands firm sequentially

Novelis Inc., an American industrial aluminium company specialised in rolling and recycling, announced its second quarter results for FY2023-24, disclosing net sales fell by 14.6 per cent Y-o-Y from US$4.8 billion to US$4.1 billion. A dip in aluminium flat rolled product shipments to 933,000 tonnes due to sluggish global demand could be attributed to the fall in Novelis' net sales in Q2. However, the net sales in Q2 stood steady compared to US$4.09 billion in Q1 FY24.

In six months of FY24, the company's net sales amounted to US$8.2 billion, down by 18 per cent from US$10 billion during the corresponding period of the previous year.

Net income attributable to common shareholders decreased 14.2 per cent Y-o-Y from US$183 million to US$157 million, driven by lower average aluminium prices. But on a quarter-on-quarter basis, Novelis' net income slightly grew sequentially by 0.64 per cent from US$156 million. Totalling the net income in six months of FY2024, it stood at US$313 million versus US$491 million a year ago.

Adjusted EBITDA decreased 4 per cent from the prior year to US$484 million in the second quarter of the fiscal year 2024, driven by less favourable metal benefit from recycling and a prior year's favourable impact from capitalising high operating costs into inventory. However, these factors were slightly offset by higher product pricing, a good product mix, and some lower freight costs. From Q1, Adjusted EBITDA in Q2 edged 14.96 per cent higher than US$421 million.

Net cash flow provided by operating activities was $290 million in the first six months of fiscal year 2024 compared to $196 million in the prior fiscal year period, primarily due to favourable changes in working capital.

Commenting on the Q2 financial results, Steve Fisher, Novelis president and CEO, said: We are pleased to see another quarter of sequential improvement in Adjusted EBITDA, driven by initial demand recovery in our core beverage packaging sheet end market as industry supply chain destocking activity is largely behind us. We delivered a solid second quarter, demonstrating the resilience of our business on account of our diverse customer base across premium end markets, our leadership position in aluminum recycling, a solid balance sheet, and the scale and efficiency of our global operations. The business will only be further strengthened in the coming years as we complete strategic investments underway in new rolling and recycling capacity."

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