Novelis reports a net loss while maintaining solid liquidity in Q2 2016

Novelis, the world leader in aluminum rolling and recycling, reported a net loss of $13 million for second quarter of fiscal year 2016. Excluding tax-effected special items, the company reported net income of $25 million in the second quarter of fiscal 2016 compared to $36 million in the second quarter of fiscal 2015.

Excluding the impact of metal price lag in both periods, Adjusted EBITDA was $236 million in the second quarter of fiscal 2016, up seven percent compared to $221 million in the prior year.

"Our focus on growing premium can, automotive and high-end specialty shipments, managing costs and reducing working capital is delivering results," said Steve Fisher, President and Chief Executive Officer for Novelis. "We are leveraging new assets, reducing start-up costs, and building momentum in our expanded automotive and can sheet businesses. We are now commissioning our two most recently constructed automotive lines in the US and Germany and solidifying our position as the global leader in aluminum flat rolled products."

Shipments of rolled aluminum products totaled a record 788 kilotonnes in the second quarter of fiscal 2016, a three percent increase compared to 765 kilotonnes reported in the prior year period. However, sharply lower average aluminum prices and local market premiums drove a twelve percent decrease in revenues to $2.5 billion for the second quarter of fiscal 2016 compared to $2.8 billion in fiscal 2015.

Average local market metal premiums continued to decline in the second quarter of fiscal 2016 creating negative metal price lag of $54 million. Adjusted EBITDA for the second quarter of fiscal 2016 including metal price lag was $182 million.

The company generated $140 million of free cash flow in the second quarter of fiscal 2016 as compared to negative $108 million in the second quarter of fiscal 2015. Novelis continues to expect positive free cash flow for the full fiscal year after spending approximately $400 million on capital expenditures.

As of September 30, 2015, the company reported solid liquidity of $968 million.