Metals & Mining News

Hindalco-led arm Novelis records net income of $240M in Q1FY22; net sales rise by a whopping 59% yoy

Hindalco Industries, US-based subsidiary, Novelis Inc, has reported net income attributable to its common shareholder of $240 million in the first quarter of the fiscal year 2022 compared to a net loss of $79 million in the prior-year period.

Net income from continuing operations increased to $303 million compared to a net loss of $61 million in the prior year, which had been negatively impacted by the COVID-19 pandemic and acquisition-related special items.

Excluding special items in both years, the first-quarter fiscal year 2022 net income from continuing operations of $260 million is up significantly compared to $22 million in the prior year, driven mainly by higher after-tax Adjusted EBITDA.

In its financial audit report, Hindalco said that Novelis posted Net sales increased 59 per cent to $3.9 billion for the first quarter of the fiscal year 2022 compared to $2.4 billion in the prior-year period, primarily driven by a 26 per cent increase in shipments, favourable product mix and higher average aluminium prices. Total flat-rolled product shipments increased to 973 kilotonnes in the first quarter of the fiscal year 2022 compared to 774 kilotonnes in the prior-year period, mainly a result of strong demand across end markets in the current year, compared to a soft prior year shipment quarter impacted by temporary customer shutdowns due to the COVID-19 pandemic. Current year beverage packaging and speciality product shipments benefited from strong market demand, while automotive shipments are more than double the prior year despite some headwinds from the current semiconductor chip shortage impacting the automotive industry.

“Our strategy to grow a diverse portfolio of sustainable aluminium products utilizing our leading geographic footprint to meet strong demand has again delivered outstanding results in the quarter,” said Steve Fisher, President and CEO, Novelis Inc. “With new automotive capacity in the US and China now ramping up and the financial fortitude to continue to invest in growth opportunities aligned with our long-term carbon neutrality goals, we will further expand our leading position in delivering low-carbon, sustainable aluminium solutions across premium end markets worldwide.”

Adjusted EBITDA increased 119 per cent to $555 million in the first quarter of the fiscal year 2022 compared to $253 million in the prior-year period. The increase in Adjusted EBITDA is primarily due to higher volume and favourable product mix, as well as metal benefits and a $47 million gain related to a favourable decision in Brazilian tax litigation, partially offset by higher costs resulting from higher production volume and inflationary cost pressures. Novelis achieved an Adjusted EBITDA per ton shipped of $570 in the first quarter of the fiscal year 2022, compared to $327 in the prior year and $514 in the fourth quarter of fiscal 2021. Excluding the non-recurring tax litigation benefit, Adjusted EBITDA per ton equates to $522 in the first quarter of the fiscal year 2022.

“Novelis has achieved a milestone $2 billion of Adjusted EBITDA on a trailing 12-month basis, driving rapid improvement in our net leverage ratio and providing significant financial flexibility to grow the business within our capital allocation framework,” said Devinder Ahuja, Senior Vice President and Chief Financial Officer, Novelis Inc.

The company continues to maintain a strong total liquidity position of $2.3 billion as of June 30, 2021.

At around 10.13 AM, Hindalco was trading at Rs435.25 per piece down by 1.71% on Sensex. 

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