Novelis Inc., an Atlanta-based aluminum producer, has reported net income attributable to its common shareholder of $78 million for the third quarter of the fiscal year 2019 compared with $121 million the prior year period. Excluding tax-effected special items, the company reported net income of $101 million in the third quarter of fiscal 2019 compared with $138 million in the prior year period.
According to a Novelis news release, the company attributes the decline to a $34 million noncash income tax benefit in the prior year resulting from the U.S. Tax Cut and Jobs Act of 2017.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased about 6 percent over the prior year to $322 million in the third quarter of fiscal 2019, primarily driven by higher shipments, favorable product portfolio mix, favorable metal costs and other cost efficiencies. Adjusted EBITDA per ton reached $403 in the quarter as compared with $383 in the prior year period.
Net sales increased 3 percent over the prior year to $3 billion for the third quarter of fiscal 2019. The company reports that the increase was driven by higher total shipments and a more favorable product mix. Shipments of flat-rolled products increased 1 percent to 800,000 metric tons.
According to a Novelis news release, demand for high-strength, lightweight aluminum solutions continues to increase as customers benefit from using a highly recyclable material that improves consumer products. Automakers are adopting more aluminum to build safer, stronger and lighter vehicles, while beverage companies continue to innovate sustainable aluminum packaging options.
“Continued customer demand from automakers and favorable market conditions in beverage can contributed to this quarter’s strong financial results,” says Steve Fisher, president and CEO of Novelis Inc. “Our proven operational performance and strategic growth initiatives have positioned the company to make our customers more successful today and well into the future.”
The company reports that it generated $23 million of free cash flow for the third quarter of fiscal 2019, or $119 million of free cash flow before capital expenditures of $96 million. Year-to-date free cash flow before capital expenditures improved $98 million over the prior year to $337 million, driven primarily by higher adjusted EBITDA.
“With strong free cash flow generation, we are able to fund organic investments in order to supply customers for the long term,” says Devinder Ahuja, senior vice president and chief financial officer of Novelis Inc. “Further, our diverse global footprint and product portfolio positions us to navigate near-term global economic uncertainties while maintaining our commitment to disciplined net leverage levels.”
Acquisition update
July 26, 2018, Novelis announced it had signed a definitive agreement to acquire Cleveland-based Aleris Corp. The acquisition continues to progress and is expected to close in the third quarter of calendar year 2019, subject to customary closing conditions and regulatory approvals.