Novelis reports 14% YOY growth in EBITDA during Q2 2017 despite net loss

Novelis, the world leader in aluminium rolling and recycling, today reported a net loss of $89 million for the second quarter of fiscal year 2017, compared to a net loss of $13 million in the prior year period. Current quarter results include $112 million loss on extinguishment of debt related to the refinancing of $2.5 billion of Senior Notes during the quarter which will drive significant interest savings, and $27 million related to the sale of Novelis' equity interest in Aluminium Company of Malaysia, a non-core operation in Malaysia. Excluding these and other tax-effected special items, the company reported net income of $60 million in the second quarter of fiscal 2017, up from $25 million reported in the second quarter of fiscal 2016.

"We continued driving the positive momentum achieved over the last several quarters into the second quarter," said Steve Fisher, President and Chief Executive Officer for Novelis. "Our recurring strong EBITDA performance is a result of strategic investments in new capacity, driving positive portfolio mix and efficiency gains through metal input optimization. We are confident this strategy, coupled with plant productivity and asset efficiency, will continue to drive enhanced operational performance and a stronger product portfolio."

Adjusted EBITDA for the second quarter of fiscal 2017 increased to $256 million from $182 million in the prior year period. Excluding metal price lag in both periods, Adjusted EBITDA increased 14 per cent to $270 million. The increase was primarily driven by productivity gains, better metal mix, and favourable foreign exchange gains, partially offset by higher employment costs.

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Net sales decreased five per cent to $2.4 billion for the second quarter of fiscal 2017. This was driven by lower average aluminium prices and a two per cent decline in total shipments of rolled aluminium products to 773 kilotons, partially offset by the favourable impact from our strategic shift to higher conversion premium products including a 12 per cent increase in automotive sheet shipments to record levels.

The company reported free cash flow of $44 million for the second quarter of fiscal 2017 as compared to $140 million in the prior year, with the reduction due primarily to the timing of working capital and interest payments. These factors are partially offset by stronger EBITDA performance in the current year and reduced capital expenditures of $46 million as compared to $75 million in the prior year period.

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