Hindalco's Novelis reports loss of $37 million in Q2 FY21

Hindalco Industries' U.S. subsidiary Novelis Inc. reported a net loss attributed to its common shareholder of $37 million, down 130% versus the prior year due to a $181 million net loss associated with discontinued operations.

Net income from continuing operations increased 17% versus the prior year to $144 million for the second quarter of fiscal year 2021. Excluding tax-effected special items in both years, second quarter fiscal 2021 net income was $158 million, down 1% versus the prior year period, as higher after-tax adjusted EBITDA was offset by higher depreciation, amortization, and interest expense mainly associated with the acquisition of Aleris.

Net sales increased 4% from the prior year period to $3 billion for the second quarter of fiscal 2021, primarily driven by an eleven percent increase in shipments, partially offset by lower average aluminum prices.

Adjusted EBITDA increased 22% to a record $455 million in the second quarter of fiscal 2021 compared to $374 million in the prior year period. On a consolidated per ton basis, Novelis achieved a record EBITDA per ton of $493 in the quarter.

Novelis said that the second quarter results reflected outstanding operational performance, flexible and efficient customer service, and the ability to meet rapid recovery in customer demand across end markets, with total flat rolled product shipments up 19% sequentially as compared to the first quarter of fiscal 2021.

It added that the recovery was most pronounced in the automotive market, with second quarter automotive shipments double compared to the first quarter, led by North America and the second consecutive quarter of record automotive shipments in Asia.

In South America, increased at-home beverage consumption had significantly shifted package mix towards aluminium cans, resulting in record shipments in this segment. While the COVID-19 pandemic had caused muted demand in the aerospace market, the North American building and construction market has rebounded quickly, exiting the quarter at pre-pandemic levels, it added.

"The company is also encouraged by the improving demand levels across several other specialty markets, including electronics, coffee capsules and painted products, Novelis stated.

Steve Fisher, President and CEO, Novelis Inc., said: "Our outstanding performance this quarter was largely driven by our ability to effectively manage our business and work with customers to meet a sharp increase in demand. While future economic implications resulting from the pandemic remain uncertain, our diverse product portfolio, geographic footprint, and strong financial position will enable Novelis to continue to successfully meet customer needs and continue to invest in our business."

Novelis, the world's largest recycler of aluminum, serves customers in the aerospace, automotive, beverage can and specialties industries throughout North America, Europe, Asia and South America.

Hindalco Industries, the metals flagship company of the Aditya Birla Group, is the world's largest aluminium rolling and recycling company, and a major copper player. It is also one of Asia's largest producers of primary aluminium.

The scrip rose 0.15% to currently trade at Rs 194.90 on the BSE. It traded in the range of 193.20 and 200.45 so far during the day.

On a year-to-date (YTD), the stock has lost 9.81% while the benchmark S&P BSE Sensex rose 3.97% during the same period.

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