Aluminum recycling and rolling company Atlanta-headquartered Novelis Inc. released its second-quarter 2023 financial results, revealing net sales increased 17% to $4.8 billion from $4.1 billion in 2023. the prior year period, mainly due to a 2% increase in the stable total. rolled products shipments at 984,000 tonnes, higher product prices, favorable mix and higher average aluminum prices. Despite the growth in shipments, net income attributable to its common shareholder decreased 23% to $183 million from the third quarter of 2022, while net income from continuing operations decreased by the same percentage for amount to $184 million. Excluding special items for both fiscal years, net income from continuing operations for the second quarter of fiscal year 2023 decreased 17% from a year ago to $203 million, primarily due to lower adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA.
Novelis says its shipment growth was driven primarily by higher auto shipments as semiconductor shortages affecting the auto industry began to ease. Beverage and aerospace can shipments also increased slightly. However, specialty shipments were lower in the quarter.
“We delivered a strong second quarter despite headwinds from inflation, a stronger US dollar and reduced metals-related upside, with strong operating performance that allowed us to capture robust end-market demand over the course of the year. quarter and increase total shipments,” said Steve Fisher, President and CEO. CEO of Novelis. “Although the current macroeconomic environment is uncertain, we believe that the long-term demand for durable, lightweight and infinitely recyclable aluminum remains intact. We continue to advance our transformational investment strategy to grow with our clients, reaching an exciting milestone in the United States revolutionary of our new recycling and rolling plant in Alabama last month.”
Adjusted EBITDA fell 8% to $506 million in the second quarter of fiscal 2023 from $553 million in the year-ago period, the company said, primarily due to higher energy and other operating costs due to geopolitical instability, inflation and global supply. chain disruptions, as well as unfavorable currency conversion. The company says these headwinds were partially offset by higher product prices, including passing on higher costs to customers, higher volume and a favorable product mix.
Adjusted free cash flow from continuing operations was an outflow of $90 million for the first six months of fiscal 2023, compared to a generation of $158 million in the prior year period. The company attributes the decline primarily to the negative lag in metal prices in the current year compared to a positive lag in the prior year resulting from aluminum price volatility, lower adjusted EBITDA and higher capital expenditures. Novelis reports having a net leverage ratio of 2.3x at the end of the second quarter of fiscal 2023, compared to 2.4x in the prior year period.
The company says it has a total liquidity position of $2.8 billion as of September 30, 2022.
“While demand for rolled aluminum products remains strong overall, we expect high energy costs and inflationary impacts to intensify in the near term,” said Devinder Ahuja, Executive Vice President and Chief Financial Officer of Novélis, said. “We are actively working with our clients to share in these extraordinary inflationary impacts while driving operational efficiencies and cost control measures to partially mitigate these macroeconomic headwinds. We will also continue our disciplined approach to maintaining a strong balance sheet, prioritizing and regulating capital expenditures for our strategic growth initiatives which we believe will enable us to grow over the long term.”