Oswego restart, Bay Minette aluminium project fuel Novelis’ 71% Q1 FY27 profit

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Hindalco subsidiary Novelis has expanded its aluminium rolling and recycling footprint through the continued commissioning of its Bay Minette greenfield site in Alabama and the restart of its Oswego hot mill in New York. The twin milestones propelled the company’s performance in the first quarter of fiscal year 2027 (Q1 FY2027), backed by higher aluminium prices, operational efficiencies and steady demand for sustainable aluminium solutions.

Steve Fisher, President and CEO of Novelis, said, "We are pleased to start the new fiscal year on a positive note, supported by strong execution, favourable market trends and continued demand for sustainable aluminium solutions."

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Financial report highlights: Q1 FY2027 vs Q1 FY2026

The company’s financial performance improved significantly during the quarter, with year-on-year gains in profitability metrics compared to the same quarter in FY2026.

• Net sales: USD 5.79 billion vs USD 4.70 billion, up 23 per cent Y-o-Y
• Net income (attributable to common shareholders): USD 164 million vs USD 96 million, up 71 per cent Y-o-Y
• Net income (excluding special items): USD 265 million, up 128 per cent Y-o-Y
• Adjusted EBITDA: USD 516 million vs USD 416 million, up 24 per cent Y-o-Y
• Adjusted EBITDA per tonne shipped: USD 563 vs USD 432, up 30 per cent Y-o-Y
• Adjusted free cash flow: USD 1.1 billion outflow vs USD 295 million outflow

Adjusted EBITDA rose as lower aluminium scrap costs and operational efficiencies offset shipment challenges, though higher tariffs partially offset these gains. On the other hand, working capital needs were higher due to higher aluminium prices and the financial impact of the Oswego fires, which continued to affect operating cash flow despite insurance recoveries.

The increase in net sales was primarily attributed to stronger aluminium prices. However, rolled product shipments declined 5 per cent to 916,000 tonnes, mainly due to an estimated 33,000-tonne shipment loss resulting from production disruptions caused by the Oswego fires during FY2026.

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Highlighting the company's operational progress, Fisher added, "Momentum continues to build, buoyed by the successful restart of the Oswego hot mill” as well as the “initial commissioning of key assets at Bay Minette,” marking an essential step in “positioning Novelis for its next phase of growth."

The Bay Minette project also weighed on cash generation during the quarter, with adjusted free cash flow recording a USD 1.1 billion outflow as capital expenditure remained elevated for the aluminium rolling and recycling facility. 

As of June 30, 2026, Novelis had a net leverage ratio of 4.5x and total liquidity of USD 2.1 billion, comprised of USD 1.1 billion of cash and cash equivalents and USD 1 billion of available committed credit facilities.

The company noted that production at the restarted Oswego hot mill is gradually ramping up to meet pent-up customer demand and restore shipment volumes.

Commenting on the outlook, Executive Vice President and CFO Dev Ahuja said, "With Oswego back online and Bay Minette's commissioning process getting underway, we are confident in our expectation to return to positive free cash flow in the fourth quarter of this fiscal year."

Ahuja further added, "Supported by ongoing cost discipline, expected insurance recoveries, and the continued strength of the underlying business, we anticipate beginning to deleverage as capital spending normalises following the Bay Minette startup."

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