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Aluminum rolling and recycling company Novelis Inc., Atlanta, reported a year-over-year increase in net income for the third quarter of its fiscal 2022, which ended Dec. 31, 2021 The company’s third-quarter 2022 net income attributable to its common shareholder of $262 million increased $86 million from $176 million in the prior-year period, while its net income from continuing operations increased to $259 million from $195 million in the prior year period. Excluding special items for both years, net income from continuing operations for the third quarter of fiscal 2022 increased 15% to $241 million, mainly due to lower interest expense and unrealized derivative gains in the current year, the company said.
Net sales increased 33% to $4.3 billion in the third quarter of fiscal 2022 from $3.2 billion in the prior year period, primarily due to higher average aluminum prices. Shipments of flat-rolled products totaled 930,000 metric tons in the third quarter of fiscal 2022, in line with prior year quarterly shipments of 933,000 metric tons. Novelis says shipment growth has been limited by the continued shortage of semiconductor chips that has plagued the automotive industry.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 1% to $506 million in the third quarter of fiscal 2022 from $501 million in the prior year period, according to the company, which included a $25 million customer contract. obligation service. The underlying increase in Adjusted EBITDA was primarily driven by favorable product pricing and mix, as well as favorable metals benefits, which mitigated inflationary cost pressures and costs related to market disruptions. supply chain, the company adds. Adjusted EBITDA per ton shipped increased to $544 in the third quarter of Fiscal 2022 from $537 in the prior year period.
“Our strong third quarter results reflect our team’s ability to skillfully navigate headwinds resulting primarily from global supply chain disruptions,” said Steve Fisher, the company’s president and chief executive officer. “We will continue to address these challenges while keeping an eye on our strategic growth path and meeting the growing demand for sustainable aluminum products with high recycled content.
Since October 2021, Novelis has announced several capital expansion projects designed to increase capacity and capabilities and meet its sustainability goal of becoming net carbon neutral by 2050. In January 2022, Novelis announced plans to build a $365 million recycling center for the US auto market. in Guthrie, Kentucky. With an annual casting capacity of 240,000 metric tons of sheet ingot, Novelis expects the facility to allow it to develop closed-loop recycling programs with more automotive customers in North America and reduce company’s carbon emissions of more than one million tons per year. Previously, the company announced strategic growth capital projects totaling approximately $500 million, including a $375 million investment to expand its rolling and recycling capacity in Zhenjiang, China, and a $130 million investment. dollars at its Oswego, New York plant to increase hot plant capacity and improve automotive sheet metal finishing capabilities. Novelis says it expects these projects to begin in calendar year 2022 and begin commissioning in 2024.
Beatriz Landa, Vice President of Metal Sourcing and Recycling for Novelis North America, says recycle today investment in Guthrie, Kentucky, will allow Novelis to create its own ingots for the automotive market, allowing the company to be more sustainable and independent in the market.
Year-to-date adjusted free cash flow from continuing operations was $217 million, compared to $331 million in the same period last year. Significantly higher working capital requirements, primarily due to higher aluminum prices in fiscal 2022, were partially offset by higher adjusted EBITDA and favorable price lag, according to the company. metals.
“Novelis generated over $1 billion in adjusted free cash flow in the last 12 months before capital investments, despite the significant impact of higher aluminum prices this year,” said Devinder Ahuja. , Executive Vice President and Chief Financial Officer of Novelis. “Continued strong cash generation, coupled with our disciplined capital allocation strategy, allows us to continue to strategically invest in the sustainable growth of the business while remaining within our target net debt range.”