Novelis plans to scale up production commensurate to market demand to avoid over-production, the aluminum maker indicated in its Q1 2021 earnings report.
The company noted that while its results demonstrated COVID-19’s impact, the automotive industry will continue gaining steam into next quarter and reach pre-pandemic levels. This trend will increase demand for Novelis’s rolled aluminum sheets, for which the auto industry is its main consumer.
Steve Fisher, chief executive officer of Novelis, said the firm’s sales value had declined during the quarter due to lower LME aluminum prices, while its shipments decreased by 7pc on an annual basis in Q1 FY2021 to 774,000mt because of weak demand. Shipment volumes, however, were partially offset by the aluminum maker’s acquisition of Aleris in April.
Novelis closed that transaction during the quarter after divesting its stake in Aleris’s US business to avoid a lawsuit on competitive harm that was filed by the US Department of Commerce. The company said the acquisition will lead to a synergy of $150mn, which is reflected in group’s Q1 FY2021 earnings.
The firm’s net sales declined by 17pc to $2.4bn in Q1 fy2021 compared with $2.9bn during the same quarter last fiscal.
In the quarter ended June 30, 2020, Novelis posted a net loss of $79mn compared to a net profit of $127mn during the same quarter last fiscal year.