Leading aluminium rolling and recycling company Novelis expects end-market demand from the auto sector to increase 25-30pc in CY2021 compared to CY2020. The company expects a limited impact of the ongoing semiconductor shortage on OEM production and sheet demand. Novelis reported strong results for the fourth quarter (Q4) and FY2021 (April 2020 – March 2021) supported by the synergies driven by the Aleris integration.
Outlook
The demand trend for aluminium flat-rolled products continues to be favourable in most end markets.
Novelis expects strong demand from the automotive fueled by new adoption and higher production of SUVs, pickups, electric vehicles and premium vehicles. The company expects a limited impact of the ongoing semiconductor shortage on OEM production and sheet demand. In CY2021, Novelis expects a 25-30pc increase in end-market demand compared to CY2020.
In the beverage can business segment, customers continue to request increased volumes in all regions with demand boosted by the ongoing high off-premise consumption and the shift towards sustainable packaging options. The company has announced significant expansions plans for the next 2-3 years across regions. Novelis expects a 2-3pc increase in demand in CY2021 compared to CY2020.
In the US and Europe, favourable housing fundamentals bode well for the company’s speciality segment driven by robust building and construction demand. Strong demand across markets, including electronics, heat exchangers, container and transportation products. Speciality products demand is expected to improve by 5-10% in CY2021.
The outlook for the aerospace segment remains subdued despite the rollout of vaccines. In CY2021, air travel is likely to remain restricted. The aerospace supply chain is heavily overstocked, although bookings are improving, recovery could be prolonged and uneven. Demand is expected to improve by 5-10% in CY2021.
Financials
In Q4, Novelis’s net income from continuing operations rose to $180mn, up by 186pc from the prior-year quarter. Sales grew by 33pc to $3.6bn boosted by higher automotive shipments, the addition of Aleris businesses and higher average aluminium prices. Total flat-rolled products shipments grew by 21pc to record 983,000mt while adjusted EBITDA rose by 32pc to $505mn which included a $60mn contribution from Aleris’ business. Adjusted EBITDA was $514/mt.
For the full year, net income from continuing operations rose to $458mn up by 9pc from the prior year. Sales increased by 9pc to $12.3bn while total flat-rolled products shipments rose by 10pc to 3.613mn mt. Novelis’ adjusted EBITDA increased by 16pc to $1,714mn which includes a $200mn contribution from Aleris’ business.
| Novelis’ operating results for FY2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| North America | Change YoY | Europe | Change YoY | Asia | Change YoY | South America | Change YoY | Total | Change YoY | |
Adjusted EBITDA ($ mn) | 663 | 12% | 285 | 16% | 305 | 45% | 449 | 7% | 1714 | 16% |
| Shipment of rolled products (mt) | 1.348mn | 21% | 9,77,000 | 6% | 7,46,000 | 4% | 5,79,000 | 1% | 3.613mn | 10% |
Key highlights
- * Completion of Aleris acquisition
- * Expansion of sustainability platform, committed to reduce carbon footprint by 30pc by 2026 and become net carbon-neutral by 2050
- * Increased recycled content in products to 61pc in FY2021
- * Strengthened automotive business by commissioning auto finishing capacity in the US and China