Novelis sees reduction in net income, adjusted EBITDA in Q1 of fiscal 2026

Atlanta-based aluminum recycling and rolling company Novelis Inc. has reported its earnings for the first quarter of its 2026 fiscal year, with net income attributable to its common shareholders of $96 million, down 36 percent year over year. When special items are excluded, the company’s net income totaled $116 million, 43 percent lower than in the first quarter of its 2025 fiscal year.

Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, totaled $416 million, which is 17 percent less than in the prior-year period.

The company’s rolled product shipments increased modestly year over year by 1 percent to reach 963,000 metric tons, while adjusted EBITDA per metric ton shipped was $432, 18 percent less than in the first quarter of its 2025 fiscal year.

"We continue to see strong demand for aluminum beverage packaging sheet supporting top-line growth and the need for new capacity under construction at our plant in Bay Minette, Alabama," Novelis President and CEO Steve Fisher says. "While market headwinds mainly from structurally higher scrap prices negatively impacted financial performance in the quarter, we are making solid progress on our comprehensive cost-reduction program, which we expect will lower our cost base and improve our margins.

"We have already implemented a round of organization redesign, footprint rationalization and process improvement actions to drive simplification and efficiencies. We believe these actions will accelerate anticipated run-rate cost savings to over $100 million by the end of this fiscal year, exceeding our previously estimated target of approximately $75 million."

According to the company’s earnings presentation, Bay Minette is on track for commissioning to begin in the second half of the 2026 calendar year.

First quarter financial highlights

Net sales for the first quarter of fiscal year 2026 increased 13 percent compared with the prior-year period to $4.7 billion, mainly driven by higher average aluminum prices and a 1 percent increase in total rolled product shipments compared with the prior year period. Higher beverage packaging shipments were offset partially by lower automotive and specialty shipments.

The decrease in net income attributable to Novelis’ common shareholders primarily was driven by restructuring charges and lower operating performance, according to the company, partially offset by favorable metal price lag. Decreases in net income attributable excluding special items and adjusted EBITDA mainly were driven by higher aluminum scrap prices, unfavorable product mix and a net negative tariff impact, partially offset by higher product pricing, lower selling, general and administrative costs and favorable foreign exchange.  

Net cash flow provided by operating activities increased 42 percent to $105 million in the first three months of fiscal year 2026 primarily because of lower net working capital, partially offset by lower adjusted EBITDA. Adjusted free cash flow was an outflow of $295 million in the first three months of fiscal year 2026 compared with the prior year period outflow of $280 million, with higher capital expenditures partially offset by higher net cash flow provided by operating activities.

Total capital expenditures were $386 million for the first three months of fiscal year 2026, primarily attributed to strategic investments in new rolling and recycling capacity under construction, most notably in the U.S. for the company's new greenfield rolling and recycling plant in Bay Minette.

"We are finding opportunities to streamline our cost structure in response to the challenging external environment, freeing up resources that can be invested to meet continued growing market demand for low-carbon, more sustainable aluminum products," says Dev Ahuja, executive vice president and chief financial officer.

Novelis also reported a net leverage ratio of 3.2x and total liquidity of $3 billion as of June 30, 2025, consisting of $1.1 billion in cash and cash equivalents and $2 billion in availability under committed credit facilities. In June, the company issued $400 million of tax-exempt bonds with a mandatory tender for purchase in 2032 and maturation in 2055, with the proceeds to be used to finance a portion of the construction costs at Bay Minette.

Summary & outlook

In its earnings presentation, Novelis notes resilient market demand, with strong growth expected to continue in beverage packaging.

The company says scrap prices are trending relatively stable to slightly positive, though they remain at elevated levels.

Its accelerated cost reduction actions are expected to drive higher cost savings in the 2026 fiscal year and more than $300 million in savings by the end of its 2028 fiscal year.

Novelis says it has introduced strategies to substantially mitigate higher net tariff headwinds and has prioritized investments that drive value, achieve sustainability goals and capture growing demand for sustainable aluminum flat-rolled product.