Novelis Reports Q4 Earnings in Line with Market Expectations Despite a YoY Net Income Decline
Novelis, which is backed by Hindalco, reported a 27% YoY decline in net income in the fourth quarter of FY23, amounting to $156 million. Adjusted EBITDA and net sales also declined 6% and 9% YoY, respectively. However, Novelis' overall performance met market expectations. The decrease in net income was mainly caused by the absence of lower adjusted EBITDA and metal prices that occurred in the previous year. Net income from continuing operations, excluding special items, fell 7% YoY to $175 million. Novelis posted adjusted EBITDA of $403 million,
a 6% decrease YoY. Factors such as lower volume, higher energy costs, other cost inflation, and less favourable metal benefits from recycling contributed to this decline. Net sales also decreased 9% YoY to $4.4 billion, primarily due to lower average aluminum prices and a 5% decrease in total flat rolled product shipments. However, higher aerospace shipments and record automotive shipments due to pent-up demand offset these declines.
Despite the challenges, CEO of Novelis, Steve Fisher, stated that the company had delivered solid performance and remained committed to its
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transformational organic growth plan. Overall, shipments stood at 3,790 kilo tonnes, down 2% YoY, net income at $658 million, down 31% YoY, adjusted EBITDA at $1.8 billion, down 11% YoY, and net sales increased by 8% to $18.5 billion in FY23. CFO of Novelis, Dev Ahuja, commented that the company was well-positioned to navigate current market headwinds and generate strong free cash flow despite the short-term challenges. According to the CFO, Novelis has a strong and resilient business, and they are focused on efficiently managing cash as they
move towards their next phase of transformational growth.
According to Tushar Chaudhari, Research Analyst at Prabhudas Lilladher, Hindalco remains one of the preferred picks in the metal space, following Novelis' Q4 earnings report. Chaudhari stated that the stock was trading at an attractive valuation, although he did not recommend any buy or sell. Hindalco's stock on the BSE closed at ₹436.25 per share, which was a decrease of 0.93% on Wednesday. Novelis is the world's largest aluminium rolling and recycling company and a leading provider of sustainable aluminium solutions.