Flooding and Market Conditions Contribute to Financial Decline
Novelis Inc. reported a 5% drop in adjusted EBITDA for the second quarter of its 2025 fiscal year. Despite a 1% increase in shipments, the company’s EBITDA reached $462 million. Production disruptions at its Sierre, Switzerland plant caused by flooding contributed heavily to the decline. Additionally, less favorable metal benefits and market challenges further impacted performance.
Impact of Flooding and Market Weakness
Novelis experienced a 5% increase in net sales year-over-year, reaching $4.3 billion. However, disruptions at the Sierre plant due to flooding offset this growth. Shipments rose to 945,000 metric tons, a 1% increase over the same quarter in 2024. However, adjusted EBITDA per metric ton shipped fell by 6%, dropping to $489. This decline stemmed from lower shipments to specialty markets and decreased demand in the automotive sector.
The flooding at the Swiss facility resulted in a $61 million charge. This amount covers downtime, repairs, and restructuring. Novelis estimates the total financial impact of the flooding at $80 million, including $30 million affecting adjusted EBITDA.
Continued Investment and Expansion Plans
Despite these challenges, Novelis continues to invest in growth. The company is moving forward with a $4.1 billion rolling and recycling facility in Bay Minette, Alabama. Set to begin commissioning in late 2026, this facility will have a 600,000 metric ton capacity. Most of this capacity will focus on beverage packaging, with the remaining capacity dedicated to automotive and specialty products.
Additionally, the Guthrie, Kentucky automotive recycling center is ramping up. The center will produce 240,000 tons of sheet ingot annually, serving automotive customers. These investments highlight Novelis’ commitment to meeting rising demand for sustainable aluminum products.
Strong Cash Flow Amid Increased Capital Expenditures
Novelis posted an increase in operating cash flow, reaching $374 million in the first half of fiscal year 2025. This compares to $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. This increase was driven by capital expenditures, which reached $717 million, marking a 16% rise from the previous year.
Focus on Sustainability and Carbon Neutrality
Novelis remains dedicated to sustainability. In its fiscal year 2024 sustainability report, the company revealed that 63% of its product content is recycled, a leader in the aluminum industry. Novelis is also working towards its goal of becoming carbon neutral by 2050. CEO Steve Fisher emphasized that the company’s emphasis on high-recycled content and low-carbon aluminum products aligns with growing demand for sustainable materials.
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