Novelis reports a 20% fall in net sales during Q1 FY2024 on lower shipments of 879,000 tonnes

Last week, Novelis Inc. announced the first quarter results of the financial year 2023-24 ended June 30, reporting a 19.61 per cent decline in net sales year-on-year from $5,089 million to $4,091 million, driven by lower average aluminium prices and reduced flat rolled products shipments, although offset by favourable product mix.

As per Novelis’ report, the company’s aluminium flat rolled products shipments stood at 879,000 tonnes in Q1 FY2024, down by 9 per cent Y-o-Y due to decreased beverage can shipments and a little faded demand for value-added products required in the building & construction sector.

Novelis’ net income attributable to common shareholders in Q1 FY2024 was recorded at $156 million – 49 per cent less than $306 million during the same period of the last year. Adjusted EBITDA shrank by 24.96 per cent from $561 million to $421 million, caused by lower shipments, cost inflation, and less favourable metal benefit from recycling.

The company’s net debt at the end of March 31, 2023, was $4,142 million, which grew over the next three months to amount to $4,495 million at the end of June 30, 2023.

Novelis President & CEO Steve Fisher said, "Novelis' diverse product portfolio and lower input costs delivered another sequential increase in quarterly Adjusted EBITDA and a higher Adjusted EBITDA per tonne than expected, even as inventory reduction activity across the beverage packaging supply chain continued in the quarter. We believe this can destocking activity is nearly complete, and remain focused on strengthening and expanding Novelis' capabilities to support our customers' growing demand for sustainable aluminum sheet."

Adjusted Free Cash Flow was an outflow of $349 million in the first quarter of fiscal year 2024, higher than the prior year period outflow of $73 million due primarily to a planned three-fold increase in capital expenditures on strategic investments in new rolling and recycling capacity.

Devinder Ahuja, Executive Vice President and Chief Financial Officer of Novelis Inc, said: "We expect a steady recovery in shipments to drive continued improvement in Adjusted EBITDA over the remainder of this fiscal year. This will enable continued capital deployment in support of our growth investments underway to meet growing customer demand."