The aluminium rolling and recycling major reported a net income of $164 million for the quarter, compared with the year-ago period, marking a 71% increase in profitability.
Excluding special items, net income more than doubled to $265 million, up 128% year-on-year. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), a key measure of operating performance, rose 24% to $516 million during the quarter.
Novelis said the improvement reflected better operational execution, cost efficiencies and supportive market trends, even as production challenges affected shipment volumes.
Higher aluminium prices lift revenue
Novelis’ net sales increased 23% year-on-year to $5.8 billion during the quarter, primarily driven by higher average aluminium prices.
However, higher revenue did not translate into volume growth. Total rolled product shipments declined 5% year-on-year to 916 kilotonnes.
The company attributed the decline mainly to the impact of production disruption at its Oswego facility following fires in fiscal year 2026. The disruption resulted in an estimated negative shipment impact of 33 kilotonnes during the quarter.
Despite lower shipments, operating profitability improved. Adjusted EBITDA per tonne shipped increased 30% year-on-year to $563, indicating that the company generated higher earnings from each tonne of aluminium sold.
Novelis said lower aluminium scrap prices and cost improvement initiatives supported EBITDA growth during the quarter. However, these benefits were partially offset by higher net tariffs.
The company added that the Oswego fire incident resulted in an estimated $18 million benefit to adjusted EBITDA during the quarter, as insurance proceeds received during the period more than offset the estimated impact of production interruptions.
Oswego restart, Bay Minette expansion progress
Commenting on the performance, Novelis President and CEO Steve Fisher said the company began the new fiscal year on a positive note, supported by strong execution and continued demand for sustainable aluminium solutions.
He said momentum improved after the restart of the Oswego hot mill in early June, while the initial commissioning of key assets at the Bay Minette facility represented another step in expanding the company’s manufacturing capabilities.
The Bay Minette project is a major investment aimed at increasing Novelis’ aluminium rolling and recycling capacity, helping the company cater to growing demand from industries such as automotive, beverage packaging and other sustainable aluminium applications.
Cash flow impacted by investments, working capital
While profitability improved, cash flow remained under pressure during the quarter.
Novelis reported a net cash outflow from operating activities of $455 million, compared with an inflow of $105 million in the year-ago period.
The company said the decline was primarily due to higher working capital requirements caused by rising aluminium prices, along with the impact of the Oswego disruption after adjusting for insurance recoveries.
Adjusted free cash flow stood at an outflow of $1.1 billion, compared with an outflow of $295 million a year earlier. The company attributed the increase in cash outflow mainly to lower operating cash generation and higher capital expenditure related to the Bay Minette rolling and recycling plant.
At the end of the quarter, Novelis reported a net leverage ratio of 4.5 times and total liquidity of $2.1 billion. This included $1.1 billion in cash and cash equivalents and $1 billion available through committed credit facilities.
Outlook remains focused on cash generation
Chief Financial Officer Dev Ahuja said the company expects to return to positive free cash flow in the fourth quarter of the current fiscal year.
The improvement is expected to be supported by the restart of the Oswego facility, expected insurance recoveries, continued cost-control measures and lower capital spending after the completion of major investments related to the Bay Minette facility.
The quarterly performance highlights Novelis’ ability to improve profitability despite operational disruptions, while ongoing expansion projects are expected to strengthen its long-term capacity in recycled and value-added aluminium products.
Shares of Hindalco Industries Ltd ended 1.52% higher at ₹1,035.55 on Wednesday.
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