Fires, tariffs reduce Novelis’ earnings

Atlanta-based Novelis Inc. has reported its financial results for the third quarter of its 2026 fiscal year, revealing the effects of the fires at its Oswego, New York, facility and the Section 232 tariffs on aluminum imports.

The company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $348 million, down 5 percent year over year. Novelis estimates that the Oswego fires had a negative $54 million impact, while the tariffs reduced EBITDA by $34 million. The fires also resulted in an additional pretax net loss of $327 million. These negative factors partially were offset by favorable metal price lag resulting from rising average local market aluminum premiums, Novelis says.

Oswego production interruptions reduced rolled product shipments by an estimated 72,000 metric tons, Novelis reports. Its rolled product shipments totaled 809,000 metric tons, an 11 percent decrease year over year.

"Despite facing short-term capacity constraints due to the Oswego production disruption, our underlying performance remains strong, driven by our resilient business model, strategic investments in new capacity, effective cost management initiatives and favorable market conditions—particularly in the beverage packaging sector, our largest product end market," Novelis President and CEO Steve Fisher says in the news release about the company’s quarterly earnings. "Cost efficiencies and favorable recycling benefits contributed to a 6 percent year-over-year increase in adjusted EBITDA per [metric ton] to $430 in the third quarter, even after absorbing tariffs and the impact of the Oswego fires, highlighting the robustness of our core business."

Third-quarter highlights

Net sales for the third quarter of Novelis' fiscal 2026 increased 3 percent to $4.2 billion versus the prior-year period, mainly driven by higher average aluminum prices, partially offset by an 11 percent decrease in total rolled-product shipments. Lower shipments to the automotive, beverage packaging and specialties markets primarily were the result of the estimated 72,000-metric-ton negative shipment impact related to the Oswego production disruption, partially offset by higher aerospace shipments, Novelis says.

Net income attributable to the company’s common shareholder was a loss of $160 million in the third quarter of fiscal year 2026 compared with net income of $110 million in the prior-year period.

Net cash used in operating activities totaled $90 million in the first nine months of fiscal year 2026 compared with a net cash inflow $263 million in the prior-year period, while Novelis recorded an adjusted free cash outflow of $1,641 million in the first nine months of fiscal year 2026 compared with the prior-year period outflow of $915 million, affected by an estimated negative $485 million related to the Oswego fires. The decrease in free cash flow also was partially because of the 34 percent increase in total capital expenditures to $1,577 million for the first nine months of fiscal year 2026 for strategic investments in new capacity under construction, most notably for its greenfield rolling and recycling plant in Bay Minette, Alabama.

"Despite the challenges posed by the Oswego fires, we continue to demonstrate disciplined execution of cost efficiency initiatives and cash flow management as reflected in our underlying performance," says Dev Ahuja, executive vice president and chief financial officer, Novelis. "The equity infusion from our parent company [Hindalco Industries Ltd., Mumbai, India] highlights their support and confidence in Novelis, helping us navigate a difficult but temporary situation."

In the company’s Feb. 11 earnings call, Ahuja said Novelis is discussing a possible additional equity infusion of $200 million from Aditya Birla Group. “There could be some more beyond the $750 million. … This equity infusion is a bit strategic because you know that we elevated the Bay Minette capex when we announced the last quarter results, so this is pretty much in the direction of the elevated capex for Bay Minette, which we revised from $4.1 [billion] to around $5 [billion]. “

Update on Oswego plant fires

Novelis’ Oswego plant experienced two significant fires Sept. 16 and Nov. 20 of last year that were contained to the hot mill area. The company says everyone working at the plant was safely evacuated, with no injuries to employees, contractors or first responders during either event.

"We are aggressively leveraging our global footprint and third-party sources to overcome capacity constraints while we simultaneously restore the Oswego plant," Fisher says. "Based on work to date, we expect to restart the Oswego hot mill late in the second quarter of calendar 2026."

The company says that while analysis is ongoing, several factors could have contributed to the September fire, including the composition and characteristics of the coil, as well as lubricants in the mill and surrounding structure. The cause of the November fire is still under investigation.

In the company’s earnings call, Fisher said Novelis is applying what it’s learning from these investigations to all its mills to ensure such incidents do not recur in the future.