Novelis Inc., the world leader in aluminum rolling and recycling, today reported record results for the fourth quarter and fiscal year 2017 with significant year-over-year increases in Adjusted EBITDA, net income, free cash flow and automotive sheet shipments. This strong performance was driven by Novelis’ focused strategy to improve operational efficiencies and increase shipments of premium products, resulting in fiscal 2017 net income attributable to its common shareholder of $47 million for the fourth quarter and $45 million for the full year.
Excluding tax-effected special items in all periods, Novelis grew its fourth quarter fiscal 2017 net income 46 percent to $73 million, and increased full year net income by 78 percent to $233 million. The increase in both fourth quarter and full year net income reflects the significant improvement in adjusted EBITDA, as well as lower interest expense, a result of the company’s long-term debt refinancing actions during fiscal 2017.
“By consistently executing our strategy and staying focused on business fundamentals, we have driven value for our stakeholders and are able to better serve our customers,” said Steve Fisher, President and Chief Executive Officer for Novelis. “This year’s record performance provides us with a blueprint for sustainable results and the strategic flexibility to enhance our leadership position in the industry.”
Key achievements in fiscal 2017 include:
- Increased Adjusted EBITDA per ton, excluding metal price lag, by $45 to $354 per ton.
- Refinanced $2.5 billion of senior notes and a $1.8 billion term loan, reducing annual cash interest by $79 million and extending debt maturity profile.
- Improved metal mix by increasing recycled inputs from 53 percent to 55 percent for the full year.
- Achieved record automotive sheet shipment levels as a result of the seamless ramp-up of all new finishing lines to support the new Ford F-Series Super Duty line of trucks in North America, the success of Jaguar Land Rover’s new aluminum-intensive vehicles in Europe, and the Cadillac CT6 and Jaguar XFL in China.
- Signed agreement with next-generation car company NIO to provide innovative aluminum solutions for its fleet of smart, high-performance, premium aluminum-intensive electric vehicles to be launched over the next five years.
Fourth Quarter Fiscal 2017 Results
Net sales increased nine percent to $2.6 billion for the fourth quarter of fiscal 2017, driven by higher average aluminum prices and increased shipments of higher conversion premium products, including a 26 percent increase in automotive shipments. Total shipments of rolled aluminum products were flat year-over-year at 789 kilotonnes.
Adjusted EBITDA for the fourth quarter of fiscal 2017 increased to $292 million from $270 million. There was no metal price lag in the current year period. Excluding $7 million of negative metal price lag in the prior year, adjusted EBITDA increased five percent. Higher automotive sheet shipments, operating efficiencies, lower metal cost, and favorable currency were partially offset by higher employment cost and lower prices on some can and specialty products.
Full Year Fiscal 2017 Results
Revenues decreased three percent to $9.6 billion in fiscal 2017. A two percent decline in shipments to 3,067 kilotonnes was partially offset by an increased level of higher conversion premium products, including a record level of automotive shipments. For fiscal 2017, the percentage of the company’s shipment portfolio stemming from automotive sheet grew to 18 percent, up from 15 percent in the prior year.
Adjusted EBITDA grew 33 percent to $1.05 billion in fiscal 2017, due in part to the reduced negative impact of metal price lag during fiscal 2017 as local market premium volatility has moderated. Metal price lag reduced to negative $31 million in fiscal 2017 as compared to negative $172 million in fiscal 2016.
Excluding the impact of metal price lag in both years, Adjusted EBITDA was $1.09 billion in fiscal 2017, up 13 percent compared to $963 million in fiscal 2016. The increase was driven by strong operational efficiencies, favorable product mix, and favorable currency, partially offset by lower shipments.
The company more than doubled its full year free cash flow to a record $361 million in fiscal 2017 driven by stronger adjusted EBITDA, as well as lower interest and capital expenditures. Capital expenditures declined to $224 million as compared to $370 million in the prior year.
“We exceeded our expectations for delivering strong free cash flow as a result of excellent EBITDA performance and significant interest savings generated by our debt refinancing actions,” said Devinder Ahuja, Senior Vice President and Chief Financial Officer. “Not only have we strengthened our balance sheet and driven our net debt leverage ratio below 4x, our continued focus on driving operational excellence and positive portfolio shift will allow us to sustain our current levels of performance.”
As of March 31, 2017, the company reported strong liquidity of $1.3 billion.
Fourth Quarter and Full Fiscal Year 2017 Earnings Conference Call
Novelis will discuss its fourth quarter and full fiscal year 2017 results via a live webcast and conference call for investors at 9:00 a.m. ET on Wednesday, May 10, 2017. To view slides and listen only, visit the web at https://cc.callinfo.com/r/1qaji08qitzcm&eom. To join by telephone, dial toll-free in North America at 877 893 5390, India toll-free at 18002662125 or the international toll line at +1 415 226 5355. Presentation materials and access information may also be found at novelis.com/investors.
