Aluminium product manufacturer Novelis says that its portfolio shift towards premium products is delivering results despite falling aluminium prices causing an overall loss in profit in the second quarter (Q2) of the 2015/16 fiscal year compared to the same period the year before.

Excluding the metal price lag felt in both periods, the company registered $236 million (£156 million) in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the second quarter of 2015/16, up seven per cent from the same period of 2014/15 ($221 million/£146 million).

Company ‘building momentum in expanded automotive and can sheet businesses’

Steve Fisher, President and CEO for Novelis, said: “Our focus on growing premium can, automotive and high-end specialty shipments, managing costs and reducing working capital is delivering results.

“We are leveraging new assets, reducing start-up costs, and building momentum in our expanded automotive and can sheet businesses. We are now commissioning our two most recently constructed automotive lines in the US and Germany and solidifying our position as the global leader in [aluminium] flat rolled products.”

Results in detail

The second quarter results released yesterday (9 November) showed a net loss of $13 million (£8.5 million) across the global operations of the Atlanta-based company in Q2 of the 2015/16 fiscal year (1 July-30 September), but excluding tax-effected special items, the net income totalled $25 million (£16 million).

This increase in EBITDA , it said, was driven by higher shipments of premium automotive and beverage can sheets, ‘partially offset by less favourable recycling benefits due to lower aluminium prices’ compared to the previous year. From September 2014 to September 2015, the price of aluminium fell from around $1,990 (£1,317) per tonne to $1,589 (£1,052) per tonne – a 20 per cent drop.

The results also reflect higher costs associated with the start-up and support of new automotive finishing and recycling capacity.

The Q2 results also show an 11 per cent increase from the first quarter EBITDA of $212 million (£140 million). This rise in earnings, Novelis suggests, was primarily driven by higher shipments, better product mix and lower start-up costs.

Shipments of rolled aluminium products recorded by Novelis in the second quarter totalled 788,000 tonnes, a record for the company and a three per cent increase on the same period in 2014/15. However, the falling aluminium prices and local market premiums drove a 12 per cent decrease in revenues to $2.5 billion (£1.7 billion) for the second quarter, compared to the previous year’s $2.8 billion (£1.9 billion).

More information on the company’s second quarter figures is available on the Novelis website.