Novelis, the world leader in aluminium rolling and recycling, today reported net income grew to $46 million for the third quarter of fiscal year 2015, up significantly from the $13 million reported in the third quarter of fiscal year 2014. Excluding certain tax-effected items in both periods, net income is $60 million for the third quarter of fiscal 2015, more than double the $23 million reported in the prior year period.
Adjusted EBITDA for the third quarter of fiscal 2015 was $236 million, a 16% increase compared to the $203 million reported for the prior year. The increase was primarily driven by higher shipments as a result of strategic capacity expansions in Asia and South America, favourable product mix, and cost benefits from using recycled metal inputs.
Third quarter fiscal 2015 revenues climbed 18% to $2.8 billion compared to $2.4 billion for the third quarter of fiscal 2014. Revenue growth was driven by a 5% increase in shipments of rolled aluminium products to 757 kilo tonnes for the third quarter of fiscal 2015 compared to 721 kilo tonnes in the prior year period. All four operating regions reported an increase in shipments year-over-year. Higher metal prices also contributed to the increase in revenue.
“Our earnings will further improve in the fourth quarter as we near the full production run-rate of automotive sheet for Ford, ship at record levels, and further ramp up new recycling facilities in Germany and Brazil,” said Martens.
“However, this growth will be tempered by negative currency headwinds in Europe, challenging pricing dynamics in Asia, and reduced production related to the Logan hot mill outage in North America last month. In spite of these market challenges, we still expect EBITDA for the second half of fiscal 2015 will be higher than in the first half of the year.”
The company reported negative free cash flow of $(12) million in the third quarter, a $49 million increase over the prior year. “Free cash flow increased in the third quarter despite rising aluminium prices due to stronger EBITDA, lower capital spending, and working capital initiatives,” said Steve Fisher, Chief Financial Officer for Novelis. “Higher EBITDA and the benefits from structurally reducing working capital will allow us to generate positive free cash flow by fiscal year end.”
At the end of the third quarter, the company reported liquidity of $839 million.