Novelis, the world leader in aluminum rolling and recycling, today reported a net loss of $13 million for second quarter of fiscal year 2016.  Excluding tax-effected special items, the company reported net income of $25 million in the second quarter of fiscal 2016 compared to $36 million in the second quarter of fiscal 2015.

Excluding the impact of metal price lag in both periods, Adjusted EBITDA was $236 million in the second quarter of fiscal 2016, up seven percent compared to $221 million in the prior year.  The increase was driven by higher shipments of premium automotive and beverage can sheet, partially offset by less favorable recycling benefits due to lower aluminum prices as compared to the prior year.  Current year results also reflect higher costs associated with the start-up and support of new automotive finishing and recycling capacity.  However, the company has made good progress reducing new asset start-up costs on a sequential basis.  Adjusted EBITDA excluding metal price lag increased eleven percent in the second quarter of fiscal 2016 from $212 million reported in the first quarter of fiscal 2016, primarily driven by higher shipments, better product mix and lower start-up costs.

"Our focus on growing premium can, automotive and high-end specialty shipments, managing costs and reducing working capital is delivering results," said Steve Fisher, President and Chief Executive Officer for Novelis. "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 aluminum flat rolled products."

Shipments of rolled aluminum products totaled a record 788 kilotonnes in the second quarter of fiscal 2016, a three percent increase compared to 765 kilotonnes reported in the prior year period.  However, sharply lower average aluminum prices and local market premiums drove a twelve percent decrease in revenues to $2.5 billion for the second quarter of fiscal 2016 compared to $2.8 billion in fiscal 2015. 

Average local market metal premiums continued to decline in the second quarter of fiscal 2016 creating negative metal price lag of $54 million.  Although the company uses derivatives contracts to minimize the price lag associated with LME base aluminum prices, it does not use derivative contracts for local market premiums, as adequate cost-effective hedges are not available.  Adjusted EBITDA for the second quarter of fiscal 2016 including metal price lag was $182 million. 

The company generated $140 million of free cash flow in the second quarter of fiscal 2016 as compared to negative $108 million in the second quarter of fiscal 2015.  The increase over the prior year was primarily a result of lower capital expenditures, as well as a reduction in working capital attributed to lower metal prices and the company's focus on reducing inventory levels.  The company continues to expect positive free cash flow for the full fiscal year after spending approximately $400 million on capital expenditures.

As of September 30, 2015, the company reported solid liquidity of $968 million. 

Second Quarter of Fiscal Year 2016 Earnings Conference Call 
Novelis will discuss its second quarter of fiscal year 2016 results via a live webcast and conference call for investors at 8:00 a.m. ET on Monday, November 9, 2015.  To view slides and listen only, visit the web at https://cc.callinfo.com/r/1n2iqpaihaa3e&eom. To join by telephone, dial toll-free in North America at 800 954 0625, India toll-free at 0008008521504 or the international toll line at +1 212 231 2936.  Presentation materials and access information may also be found at novelis.com/investors.