Novelis Reports Decline in EBITDA Despite Increased Shipments

Key Issue: Lower EBITDA Driven by Production Disruptions and Market Conditions
Novelis Inc. has reported a 5% decline in adjusted EBITDA for the second quarter of its 2025 fiscal year, despite a 1% increase in rolled product shipments. The company posted $462 million in adjusted EBITDA, which was impacted by production interruptions at its Sierre, Switzerland plant due to flooding, as well as less favorable metal benefits and a challenging product mix.

Revenue and Shipments Increase, But Production Interruptions Weigh on Performance
Higher Sales Offset by Impact from Sierre Plant Flooding
While Novelis saw a 5% increase in net sales year over year, reaching $4.3 billion, the growth was tempered by disruptions caused by the flood at its Swiss plant. Shipments totaled 945,000 metric tons, a 1% increase compared to the same quarter in 2024. However, the company’s adjusted EBITDA per metric ton shipped decreased by 6% to $489, due to lower shipments to specialty markets and reduced demand from the automotive sector.

The flood at the Sierre facility resulted in a $61 million charge for the quarter, including costs for downtime, repairs, and restructuring. The company estimates the total net cash impact from the flooding, after insurance, at $80 million, with $30 million of that affecting adjusted EBITDA.

Ongoing Investments and Strategic Expansion
Capital Expenditures Focused on New Rolling and Recycling Facilities
Despite the setbacks, Novelis is continuing to invest in its growth initiatives. The company is advancing its $4.1 billion rolling and recycling facility in Bay Minette, Alabama, set to begin commissioning in late 2026. Once complete, the facility will have a total capacity of 600,000 metric tons, with most of it dedicated to beverage packaging and the remainder focused on automotive and specialty products.

Additionally, Novelis’ Guthrie, Kentucky automotive recycling center is in its initial ramp-up phase, with the capacity to produce 240,000 tons of sheet ingot annually for its automotive customers. These investments reflect Novelis’ focus on expanding its recycling and rolling capacities to meet increasing demand for sustainable aluminum products.

Cash Flow and Financial Outlook
Operating Cash Flow Strong, But Free Cash Flow Negative
In terms of cash flow, Novelis saw an increase in net cash flow from operating activities, which reached $374 million in the first half of fiscal year 2025, up from $290 million in the same period last year. However, the company reported an adjusted free cash flow outflow of $345 million, higher than the $300 million outflow in the prior year, mainly due to increased capital expenditures on new projects. Capital expenditures for the first half of the fiscal year totaled $717 million, a 16% increase from the previous year.

Sustainability and Commitment to Carbon Neutrality
Focus on Recycled Content and Carbon Neutrality by 2050
Novelis continues to prioritize sustainability in its operations. The company’s fiscal year 2024 sustainability report highlighted that 63% of its product content is recycled, a leading figure in the aluminum industry. The company remains committed to its goal of becoming carbon neutral by 2050. CEO Steve Fisher noted that Novelis’ efforts to incorporate high-recycled content and lower-carbon aluminum products align with growing customer demand for sustainable materials.