Novelis reports increase in net sales in FY 2018 driven by higher shipments of premium products

Novelis Inc., the world leader in aluminium rolling and recycling, reported record results for the fourth quarter and fiscal year 2018. The company reported net income of $106 million for the fourth quarter and $635 million for the full year. The increase is driven by its focused strategy to improve operational efficiencies, increase shipments of premium products, and make key investments to grow automotive capacity. 

Excluding tax-effected special items in both years, Novelis reported net income of $101 million in Q4 and $420 million in fiscal year 2018.

In the fourth quarter of fiscal 2018, net sales increased 17% over the prior year to $3.1 billion, driven by higher average aluminium prices, higher total shipments, and a favorable impact from record automotive shipments.  Shipments of flat rolled product shipments increased to a record 805, thousand tonnes.

Adjusted EBITDA increased 9% to $319 million, reflecting reflects higher shipments as well as the company's strategy to deliver a more profitable product mix with higher automotive shipments, and increased operational efficiencies including a more favorable metal input mix.

For the full Year fiscal 2018, net sales grew 20% to $11.5 billion, driven by higher average aluminium prices, record shipments and increased shipments of higher conversion premium products.  Total shipments of flat rolled products grew 4% to 3,188 thousand tonnes. 

Adjusted EBITDA stood at $1,215 million, driven by higher shipments and strong operational efficiencies, as well as favorable product mix, metal costs and currency impacts, partially offset by lower can prices. Free cash flow increased $406 million, driven by stronger adjusted EBITDA and lower interest, despite significant working capital pressure from higher aluminium prices.

“By strengthening its automotive portfolio and making strategic investments to increase capacity, Novelis broadened its leadership position within the industry and is committed to developing next-generation high-strength, highly-formable 6xxx and 7xxx series alloys for future vehicle design.”

“As projections for aluminium adoption increase, Novelis will continue to partner with OEMs to develop more aluminium based vehicle architecture from hang-on parts to complete structural aluminium-intensive bodies.”

"Strong operating cash flow will be utilized to fund a disciplined increase in strategic investments in fiscal 2019, particularly in our automotive business to meet growing customer demand”, said Devinder Ahuja, Senior Vice President and Chief Financial Officer.

According to company’s press release, Novelis completed a joint venture to establish Ulsan Aluminum by selling approximately 50% of its ownership of the Ulsan, South Korea plant, to Kobe Steel for $314 million. The company launched Novelis Advanz 6HF -e/s200 alloy in North America and increased recycled content from 55% to 57%.