- Novelis reported Q1 adjusted net income of $265 million, up 128% year-on-year
- Net sales rose 23% to $5.8 billion, driven by higher aluminium prices
- Shipments declined 5% to 916 kilotonnes due to Oswego plant disruptions
Novelis Inc., the aluminium rolling and recycling company owned by Hindalco Industries, reported a sharp improvement in first-quarter earnings, with adjusted net income more than doubling even as shipments declined following last year's disruption at its Oswego plant.
Net income attributable to the company's common shareholder, excluding special items, surged 128% year-on-year to $265 million in the quarter ended June 30, 2026. Reported net income rose 71% to $164 million.
Adjusted EBITDA increased 24% from a year earlier to $516 million, while adjusted EBITDA per tonne shipped climbed 30% to $563, supported by lower aluminium scrap prices and cost efficiencies.
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Net sales rose 23% year-on-year to $5.8 billion, primarily driven by higher average aluminium prices. However, rolled product shipments fell 5% to 916 kilotonnes, reflecting an estimated 33-kilotonne impact from production disruptions caused by the Oswego plant fires in fiscal 2026.
The company said the Oswego hot mill resumed operations in early June, with production gradually ramping up to address pent-up customer demand following two major fires at the New York facility last year.
Despite the earnings growth, Novelis reported a net operating cash outflow of $455 million during the quarter, compared with an inflow of $105 million a year ago. Adjusted free cash flow outflow widened to $1.13 billion, largely due to higher working capital requirements and elevated capital expenditure on its Bay Minette rolling and recycling plant in Alabama.
"Our expectation is to return to positive free cash flow in the fourth quarter of this fiscal year," said Dev Ahuja, Executive Vice President and CFO of Novelis.
"Supported by ongoing cost discipline, expected insurance recoveries, and the continued strength of the underlying business, we anticipate beginning to deleverage as capital spending normalizes following the Bay Minette startup," he said.
The company ended the quarter with $2.1 billion in total liquidity, including $1.1 billion in cash and cash equivalents, while its net leverage ratio stood at 4.5x.
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