Aluminium recycling and rolling company Novelis has reported ‘strong results’ for the third quarter of the fiscal year 2015, after its reported net income grew to $46 million (£30 million) in the third quarter, up from the $13 million (£8.5 million) reported in same period last year.
Adjusted earning before interest, taxes, depreciation and amortisation (EBITDA) for the third quarter of fiscal 2015 was $236 million (£154 million), a 16 per cent increase compared to the previous year. This increase was primarily driven by higher shipments as a result of ‘strategic capacity expansions in Asia and South America, [favourable] product mix, and cost benefits from using recycled metal inputs’.
Revenues climbed 18 per cent to $2.4 billion (£1.6 billion) for the third quarter, driven by a five per cent increase in shipments of rolled aluminium products. Higher metal prices also contributed to the increase in revenue.
At the end of the third quarter, the company reported liquidity of $839 million (£546 million).
Challenges ahead
“Our strong third-quarter results are a clear demonstration that our new business model is delivering benefits”, said Phil Martens, President and Chief Executive Officer for Novelis.
“By shifting our portfolio to more premium products in high-growth markets and advancing our recycling operations, we set record can and automotive shipments, generated significantly higher earnings, and achieved our mid-decade goal of having 50 per cent recycled content in our products.”
He added: “Our earnings will further improve in the fourth quarter as we near the full production run-rate of automotive sheet for Ford, ship at record levels, and further ramp up new recycling facilities in Germany and Brazil. However, this growth will be tempered by negative currency headwinds in Europe, challenging pricing dynamics in Asia, and reduced production related to the Logan hot mill [part-owned by Novelis] outage in North America last month. In spite of these market challenges, we still expect EBITDA for the second half of fiscal 2015 will be higher than in the first half of the year.”
Read the full breakdown of Novelis’s results for the third quarter of fiscal 2015.
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How will the government and DMOs address the challenges of including glass in DRS while ensuring a level playing field across the UK?
There's no easy solution to include glass in the DRS while maintaining a level playing field. Potential approaches include a phased introduction of glass, potentially with higher deposits to reflect its logistical challenges. The government and DMOs could incentivise innovation in glass packaging design and subsidise dedicated return points for glass-handling. Exemptions for smaller businesses unable to handle glass might also be necessary. Any successful solution will likely blend several approaches. It must address the differing priorities of devolved administrations, balance environmental benefits with logistical and cost implications, and be supported by robust consumer education campaigns emphasizing the importance of glass recycling.