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Novelis Q4 Sales Dive 12 % To $2.7 Billion As Commodity Prices Fall
The current quarter includes a cumulative positive impact of 29 million dollars from a contractual customer obligation pertaining to the full fiscal year.
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Novelis Inc, a subsidiary of Aditya Birla-led Hindalco Industries, has reported 12 per cent year-on-year decline in net sales to 2.7 billion dollars for the fourth quarter of fiscal 2020 due to lower average LME aluminum prices and local market premiums, and a 7 per cent decline in shipments.
The decline in flat rolled product shipments to 811 kilotonnes was against a strong prior year record level, and partially due to the initial impacts from COVID-19 related disruptions in March. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 7 per cent to 383 million dollars in the fourth quarter of fiscal 2020 compared to 357 million dollars in the prior year period.
The current quarter includes a cumulative positive impact of 29 million dollars from a contractual customer obligation pertaining to the full fiscal year. Other favourable drivers for the year-over-year improvement include lower metal and other operating costs, lower selling, general and administrative expenses (SG&A), and favourable foreign exchange, mostly offset by lower shipments.
For the full year, net sales decreased 9 per cent from the prior year to 11.2 billion dollars, driven by lower average LME aluminum prices and local market premiums. Flat rolled product shipments were flat compared to the prior year at 3,273 kilotonnes.
Adjusted EBITDA increased 8 per cent to a record 1.47 billion dollars in fiscal 2020 compared to 1.36 billion in the prior year, primarily driven by portfolio optimisation efforts, favorable North American specialties product pricing, operating cost efficiencies and favorable foreign exchange, partially offset by less favorable recycling benefits due to lower aluminum prices.
"We entered a period of challenging market conditions in a position of strength with ample cash and liquidity," said Devinder Ahuja, Senior Vice President and Chief Financial Officer at Novelis Inc.
"We remain committed to completing our strategic capacity expansion projects to position the company for long-term growth, while at the same time taking decisive steps to reduce costs and prioritise capital spend to ensure Novelis is positioned to continue to drive sustainable growth."
As of March 31, the company reported a strong total liquidity position of 2.6 billion dollars, including 400 million dollars in cash used to partially fund the Aleris acquisition in April and reduced its net leverage ratio to 2.1x as compared to 2.5x in the prior year period.