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Hindalco gains after Novelis reports 37% jump in Q3 net income

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Hindalco Industries advanced 0.41% to Rs 194.35 after the company's subsidiary, Novelis Inc's net income jumped 37% year-on-year to $107 million in the third quarter of fiscal year 2020.

Novelis Inc., the world leader in aluminum rolling and recycling, on Tuesday reported net income attributable to its common shareholder of $107 million for the third quarter of fiscal year 2020, compared to $78 million in the prior year period. Excluding tax-effected special items in both years, the company reported net income of $132 million in the third quarter of fiscal 2020, compared to $101 million in the prior year period. This 31% increase is primarily due to higher Adjusted EBITDA.

Adjusted EBITDA increased 7% to $343 million in the third quarter of fiscal 2020 compared to $322 million in the prior year period, primarily driven by portfolio optimization efforts, operating cost efficiencies, and favorable foreign exchange, partially offset by less favorable recycling benefits due to lower aluminum prices. Adjusted EBITDA per ton reached $430 in the quarter, as compared to $403 in the prior year.

Net sales decreased 10% from the prior year period to $2.7 billion for the third quarter of fiscal 2020, driven by lower average LME aluminum prices and local market premiums. Flat rolled product shipments were in line with the prior year, at 797 kilotonnes.

As of 31 December 2019, Novelis Inc reported a strong total liquidity position of $1.9 billion, and reduced its net leverage ratio to 2.3x as compared to 2.8x in the prior year period.

On 26 July 2018, Novelis announced it signed a definitive agreement to acquire Aleris Corporation. Novelis has received approval from antitrust regulators in China, the U.S., and the European Commission (EC) to close the transaction. In the U.S., Novelis' ability to acquire Aleris' automotive plant in Lewisport, Kentucky, will be resolved through an arbitration proceeding in the fourth quarter. The EC's approval is conditioned on Novelis entering into an agreement to divest Aleris' Duffel plant to a buyer approved by the EC. The EC is currently reviewing the proposed buyer of the plant, Liberty House Group, a UK-based industrial conglomerate. Novelis remains fully committed to completing the transaction and continues to work with all relevant parties to do so as quickly as possible.

Hindalco Industries, an Indian aluminium and copper manufacturing company, is a subsidiary of the Aditya Birla Group. It is the flagship company of the company in the metals business.

The company's consolidated net profit slumped 32.7% to Rs 974 crore on 8.8% fall in net sales to Rs 29,657 crore in Q2 September 2019 over Q2 September 2018.

Hindalco will declare Q3 results later today, 12 February 2020.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, February 12 2020. 10:39 IST