Novelis Reports Record Fiscal Year 2011 Results

    <<
    Company Poised for Rapid Transformational Growth

    - Net Income of $116 million

    - Record Adjusted EBITDA of $1.1 billion, up 42 percent

    - Sales of $10.6 billion, up 22 percent

    - Strong Liquidity of $1.1 billion, up 3 percent

    - Solid Free Cash Flow of $310 million

    - Strong demand supports $400 million expansion of Asian operations

    - Aggressive sustainability platform aims to increase recycled content to
    80 percent by 2020











    ATLANTA, May 26, 2011 /CNW/ --

    >>

    <<
    (in $M)                   Year-Ended                Quarter-Ended
                      3/31/2011      3/31/2010 3/31/2011      3/31/2010
    Net Income (Loss)      $116           $405       $50            ($1)
    Adjusted EBITDA      $1,072           $755      $280           $232
    ---------------      ------           ----      ----           ----


    >>

Novelis Inc., the world's leading producer of aluminum rolled products, today reported net income attributable to its common shareholder of $116 million and $50 million for the full year and fourth quarter of fiscal 2011, respectively.

Adjusted EBITDA for the year was a record $1,072 million, representing a 42 percent increase from adjusted EBITDA of $755 million posted for the same period a year ago. This significant increase was driven by higher shipments, price increases, and product portfolio and footprint optimization. For the fourth quarter, adjusted EBITDA was $280 million, a 21 percent increase compared to the same period in the previous year, and a record fourth quarter adjusted EBITDA.

"Our record fiscal 2011 results reflect a number of ongoing initiatives to strengthen the business and prepare it for transformational growth," said Phil Martens, Novelis President and Chief Executive Officer. Martens pointed to a number of specific achievements, including:

    <<
    --  Global realignment of the organization that has allowed Novelis to
move
        toward its "One Novelis" goal of operating as a fully integrated
global
        company.
    --  Optimizing the Company's footprint and reducing its cost base by
        closing underperforming and non-core plants and by investing in
        recycling initiatives.
    --  Focusing on premium products, which now comprise over 70 percent of
        Novelis' product portfolio.
    --  Investing in strategic initiatives like the expansion of the Company's
        Pinda mill in Brazil and global debottlenecking projects designed to
        increase capacity.
    --  Refinancing and recapitalizing the business, which positions the
        Company to significantly invest over the next few years to capture
        strong market growth in its key product segments globally.
    --  Operating the Company's assets at or near capacity for the entire
year.

    >>

"Going forward, we see continued strong demand in the aluminum flat rolled products industry. As a result of our solid financial position, we are now able to invest strategically to capitalize on this future growth and support our customers' increasing FRP demand," said Phil Martens. "We intend to use our strong operating cash flow to fund $1.5 billion in capital expenditures over the next three years. Our previously announced rolling mill expansion in Brazil and our recently announced expansion in Korea as well as our strategic automotive expansion in North America are key focus areas in the near term to capitalize on that future growth and solidify our position as the dominant player in the global FRP industry."

Shipments of aluminum rolled products totaled 2,969 kilotonnes for fiscal 2011, an increase of 10 percent compared to shipments of 2,708 kilotonnes in the previous year. For the fourth quarter, shipments were 771 kilotonnes, an increase of 8 percent from shipments of 716 kilotonnes in the fourth quarter of the previous year. This increase in shipments for both the quarter and the year were driven by strong end-market conditions across all product segments globally, particularly can, automotive and electronics.

Net sales for fiscal 2011 were $10.6 billion, an increase of 22 percent compared to the $8.7 billion reported for fiscal year 2010. Net sales for this year's fourth quarter were $3.0 billion, an increase of 22 percent compared to the $2.4 billion reported in the same period a year ago, the result of higher shipments, conversion premiums and aluminum prices.

    <<
    (in $M)                                 Year Ended           Quarter Ended
                                    3/31/2011  3/31/2010  3/31/2011  3/31/2010
    Income Before Income Taxes           $243       $727        $42        $24
    Significant Items Affecting
     Comparisons:
      Restructuring Charges, net           34         14         (1)         7
      Unrealized (Gains)/Losses on
       Derivatives                         64       (578)        27         37
      Loss on Extinguishment of
       Debt                                84          -         10          -
      (Gain)/Loss on Sale of Assets        (4)         1          7          1
      Brazil Tax Litigation                 3         (6)         3          -
    Adjusted Pre-tax Income              $424       $158        $88        $69
    -----------------------              ----       ----        ---        ---


    >>

Adjusted pre-tax income increased 168 percent and 28 percent for the full year and fourth quarter of fiscal 2011, respectively. Adjusted pre-tax income excludes restructuring charges, unrealized gains/losses on derivatives, loss on extinguishment of debt, gain/loss on sale of assets, and Brazil tax litigation.

    <<
    (in $M)                                            Year Ended
                                               3/31/2011       3/31/2010
      Cash and cash equivalents                       $311            $437
      Overdrafts                                       (17)            (14)
      Gross availability under the ABL
       facility                                        767             603
    Total Liquidity                                 $1,061          $1,026
    ---------------                                 ------          ------
    Free Cash Flow                                    $310            $355
    --------------                                    ----            ----


    >>

For fiscal 2011, free cash flow was $310 million, compared to $355 million reported in the previous year. For the fourth quarter, free cash flow was $134 million.

"Our liquidity and free cash flow were strong for the quarter and the year," said Steve Fisher, Chief Financial Officer for Novelis. "This is a significant accomplishment considering we increased our capital expenditures by 132 percent year-over-year and working capital was negatively impacted by higher LME prices. Our liquidity position remains strong and well above our target of $750 million."

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    Fiscal 2012 Business Targets and Outlook
    >>

Over the next year, the Company expects continued strong demand in its key product segments. As a result, capital expenditures for fiscal 2012 are projected to be between $550 to $600 million.

The majority of this capital is earmarked for strategic investments which include:

    <<
    --  Brazilian and Asian rolling mill expansions;
    --  Strategic automotive capacity increase in North America; and
    --  Recycling initiatives across our operating regions.
    >>

The Company plans to primarily use its strong operating cash flow to fund these capital expenditures.

    <<

    Annual Report on Form 10-K
    >>

The results described in this press release have been reported in detail on the Company's Form 10-K on file with the SEC, and investors are directed to that document for a complete explanation of the Company's financial position and results through March 31, 2011. The Novelis Form 10-K and other SEC filings are available for review on the Company's website at www.novelis.com.

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    Fourth Quarter and Fiscal 2011 Earnings Conference Call
    >>

Novelis will discuss its fourth quarter and fiscal 2011 results via a live webcast and conference call for investors at 9:00 a.m. ET on Thursday, May 26, 2011. Participants may access the webcast at https://cc.callinfo.com/r/1sjzgjhb8c8yn. To join by telephone, dial toll-free in North America at 800 931 6428, India toll-free at 0008001007108 or the international toll line at +1 212 231 2910. Access information may also be found in the Investors section of www.novelis.com.

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    About Novelis
    >>

Novelis Inc. is the global leader in aluminum rolled products and aluminum can recycling. The Company operates in 11 countries, has approximately 10,850 employees and reported revenue of $10.6 billion in fiscal year 2011. Novelis supplies premium aluminum sheet and foil products to automotive, transportation, packaging, construction, industrial, electronics and printing markets throughout North America, Europe, Asia, and South America. Novelis is a subsidiary of Hindalco Industries Limited (BSE: HINDALCO), one of Asia's largest integrated producers of aluminum and a leading copper producer. Hindalco is a flagship company of the Aditya Birla Group, a multinational conglomerate based in Mumbai, India. For more information, please visit www.novelis.com.

    <<

    Non-GAAP Financial Measures
    >>

This press release and the presentation slides for the earnings call contain non-GAAP financial measures as defined by SEC rules. We think that these measures are helpful to investors in measuring our financial performance and liquidity and comparing our performance to our peers. However, our non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures used by other companies. These non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for GAAP financial measures. To the extent we discuss any non-GAAP financial measures on the earnings call, a reconciliation of each measure to the most directly comparable GAAP measure will be available in the presentation slides filed as Exhibit 99.2 to our Current Report on Form 8-K furnished to the SEC concurrent with the issuance of this press release. In addition, the Form 8-K includes a more detailed description of each of these non-GAAP financial measures, together with a discussion of the usefulness and purpose of such measures.

Attached to this news release are tables showing the Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, Reconciliation to Adjusted EBITDA and Free Cash Flow.

    <<

    Forward-Looking Statements
    >>

Statements made in this news release which describe Novelis' intentions, expectations, beliefs or predictions may be forward-looking statements within the meaning of securities laws. Forward-looking statements include statements preceded by, followed by, or including the words "believes," "expects," "anticipates," "plans," "estimates," "projects," "forecasts," or similar expressions. Examples of such statements in this news release include our plans to increase production capacity, our growth plans, our expectations with respect to the flat rolled products market and our view of our ability to generate free cash flow this fiscal year. Novelis cautions that, by their nature, forward-looking statements involve risk and uncertainty and that Novelis' actual results could differ materially from those expressed or implied in such statements. We do not intend, and we disclaim any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that could cause actual results or outcomes to differ from the results expressed or implied by forward-looking statements include, among other things: changes in the prices and availability of aluminum (or premiums associated with such prices) or other materials and raw materials we use; the capacity and effectiveness of our metal hedging activities, including our internal used beverage cans (UBCs) and smelter hedges; relationships with, and financial and operating conditions of, our customers, suppliers and other stakeholders; fluctuations in the supply of, and prices for, energy in the areas in which we maintain production facilities; our ability to access financing for future capital requirements; changes in the relative values of various currencies and the effectiveness of our currency hedging activities; factors affecting our operations, such as litigation, environmental remediation and clean-up costs, labor relations and negotiations, breakdown of equipment and other events; the impact of restructuring efforts in the future; economic, regulatory and political factors within the countries in which we operate or sell our products, including changes in duties or tariffs; competition from other aluminum rolled products producers as well as from substitute materials such as steel, glass, plastic and composite materials; changes in general economic conditions including deterioration in the global economy, particularly sectors in which our customers operate; changes in the fair value of derivative instruments and our ability to purchase derivative instruments; cyclical demand and pricing within the principal markets for our products as well as seasonality in certain of our customers' industries; changes in government regulations, particularly those affecting taxes, derivative instruments, environmental, health or safety compliance; changes in interest rates that have the effect of increasing the amounts we pay under our principal credit agreement and other financing agreements; the effect of taxes and changes in tax rates; the impact of timing differences between the pricing periods for the purchase and sale of aluminum; our ability to increase production capacity and our indebtedness and our ability to generate cash. The above list of factors is not exhaustive. Other important risk factors included under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2011 are specifically incorporated by reference into this news release.

    <<


    >>

Novelis Inc.

    <<
                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                      (In millions)
    >>

    <<
                                       Quarter Ended         Year Ended
                                         March 31,            March 31,
                                         ---------            ---------
                                       2011      2010     2011      2010
                                       ----      ----     ----      ----
    >>

    <<
    Net sales                        $2,960    $2,420  $10,577    $8,673
                                     ------    ------  -------    ------
    Cost of goods sold (exclusive of
     depreciation and amortization)   2,599     2,147    9,227     7,213
    Selling, general and
     administrative expenses            103        94      375       337
    Depreciation and amortization        97        99      404       384
    Research and development
     expenses                            13        11       40        38
    Interest expense and
     amortization of debt issuance
     costs                               82        44      207       175
    Interest income                      (3)       (3)     (13)      (11)
    (Gain) loss on change in fair
     value of derivative
     instruments, net                    15         2      (43)     (194)
    Loss on extinguishment of debt       10         -       84         -
    Restructuring charges, net           (1)        7       34        14
    Equity in net loss of non-
     consolidated affiliates              1         3       12        15
    Other (income) expenses, net          2        (4)       7       (25)
                                        ---       ---      ---       ---
                                      2,918     2,396   10,334     7,946
                                      -----     -----   ------     -----
    Income before income taxes           42        24      243       727
    Income tax provision (benefit)      (21)       15       83       262
                                        ---       ---      ---       ---
    Net income                           63         9      160       465
    Net income attributable to
     noncontrolling interests            13        10       44        60
                                        ---       ---      ---       ---
    Net income (loss) attributable
     to our common shareholder          $50       $(1)    $116      $405
                                        ===       ===     ====      ====






    >>

Novelis Inc.

    <<
                                    CONSOLIDATED BALANCE SHEETS
                              (In millions, except number of shares)
    >>

    <<
                                                                  March 31,
                                                                  ---------
                                                                2011     2010
                                                                ----     ----
    >>

    <<
                                       ASSETS
    Current assets
    Cash and cash equivalents                                   $311     $437
    Accounts receivable (net of allowances of $7 and $4
     as of March 31, 2011 and 2010, respectively)
     - third parties                                           1,480    1,143
     - related parties                                            28       24
    Inventories, net                                           1,338    1,083
    Prepaid expenses and other current assets                     50       39
    Fair value of derivative instruments                         165      197
    Deferred income tax assets                                    39       12
                                                                 ---      ---
     Total current assets                                      3,411    2,935
    Property, plant and equipment, net                         2,543    2,632
    Goodwill                                                     611      611
    Intangible assets, net                                       707      749
    Investment in and advances to non-consolidated
     affiliates                                                  743      709
    Fair value of derivative instruments, net of current
     portion                                                      17        7
    Deferred income tax assets                                    52        5
    Other long-term assets
     - third parties                                             193       93
     - related parties                                            19       21
                                                                 ---      ---
     Total assets                                             $8,296   $7,762
                                                              ======   ======
                        LIABILITIES AND SHAREHOLDER'S EQUITY
    Current liabilities
    Current portion of long-term debt                            $21     $116
    Short-term borrowings                                         17       75
    Accounts payable
     - third parties                                           1,378    1,076
     - related parties                                            50       53
    Fair value of derivative instruments                          82      110
    Accrued expenses and other current liabilities               568      436
    Deferred income tax liabilities                               43       34
                                                                 ---      ---
     Total current liabilities                                 2,159    1,900
    Long-term debt, net of current portion                     4,065    2,480
    Deferred income tax liabilities                              552      497
    Accrued postretirement benefits                              526      499
    Other long-term liabilities                                  359      376
                                                                 ---      ---
                                                               7,661    5,752
                                                               -----    -----
    Commitments and contingencies
    Shareholder's equity
    Common stock, no par value; unlimited number of
     shares authorized; 1,000 shares issued and
     outstanding as of March 31, 2011 and 2010,
     respectively                                                  -        -
    Additional paid-in capital                                 1,830    3,530
    Accumulated deficit                                      (1,442)  (1,558)
    Accumulated other comprehensive income (loss)                 57     (103)
                                                                 ---     ----
     Total equity of our common shareholder                      445    1,869
    Noncontrolling interests                                     190      141
                                                                 ---      ---
     Total equity                                                635    2,010
                                                                 ---    -----
     Total liabilities and equity                             $8,296   $7,762
                                                              ======   ======



    >>

Novelis Inc.

    <<
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In millions)
    >>

    <<
                                                               Year Ended
                                                               March 31,
                                                               ---------
                                                              2011      2010
                                                              ----      ----
    >>

    <<
    OPERATING ACTIVITIES
    Net income                                                $160      $465
    Adjustments to determine net cash provided by (used
     in) operating activities:
     Depreciation and amortization                             404       384
     Gain on change in fair value of derivative
      instruments, net                                         (43)     (194)
     Loss on extinguishment of debt                             84         -
     Non-cash restructuring charges, net                         5         2
     Deferred income taxes                                     (45)      229
     Write-off and amortization of fair value adjustments,
      net                                                        4      (134)
     Equity in net loss of non-consolidated affiliates          12        15
     Foreign exchange remeasurement on debt                      -       (20)
     (Gain) loss on sale of assets                              (4)        1
     Gain on reversal of accrued legal claim                     -        (3)
     Other, net                                                  2        10
     Changes in assets and liabilities (net of effects from
      acquisitions and divestitures):
     Accounts receivable                                      (295)      (46)
     Inventories                                              (218)     (264)
     Accounts payable                                          263       311
     Other current assets                                       (8)       14
     Other current liabilities                                 134        47
     Other noncurrent assets                                    (6)      (15)
     Other noncurrent liabilities                                5        42
                                                               ---       ---
    Net cash provided by operating activities                  454       844
                                                               ---       ---
    INVESTING ACTIVITIES
    Capital expenditures                                      (234)     (101)
    Proceeds from sales of assets
    - third parties                                             21         5
    - related parties                                           10         -
    Changes to investment in and advances to non-
     consolidated affiliates                                     -         3
    Proceeds from related party loans receivable, net           (1)        4
    Net proceeds from settlement of derivative instruments      91      (395)
                                                               ---      ----
    Net cash used in investing activities                     (113)     (484)
                                                              ----      ----
    FINANCING ACTIVITIES
    Proceeds from issuance of debt
     - third parties                                         3,985       177
     - related parties                                           -         4
    Principal repayments
     - third parties                                        (2,489)      (67)
     - related parties                                           -       (95)
    Short-term borrowings, net                                 (56)     (193)
    Return of capital to our common shareholder             (1,700)        -
    Dividends, noncontrolling interest                         (18)      (13)
    Debt issuance costs                                       (193)       (1)
                                                              ----       ---
    Net cash used in financing activities                     (471)     (188)
                                                              ----      ----
    Net increase (decrease) in cash and cash equivalents      (130)      172
    Effect of exchange rate changes on cash balances held
     in foreign currencies                                       4        17
    Cash and cash equivalents - beginning of period            437       248
                                                               ---       ---
    Cash and cash equivalents - end of period                 $311      $437
                                                              ====      ====




    >>

    <<
    Reconciliation from Net Income (Loss) Attributable to our Common
    Shareholder to Adjusted EBITDA
    >>

    <<
    Novelis is providing disclosure of the reconciliation of reported
    non-GAAP financial measures to their comparable financial measures
    on a GAAP basis.
    >>

    <<
    (in millions)                    Quarter Ended           Year Ended
                                     -------------           ----------
                                       March 31,             March 31,
                                       ---------             ---------
                                     2011         2010    2011        2010
                                      ---          ---    ----        ----
    Net income (loss) attributable
     to our common shareholder        $50          $(1)   $116        $405
     Noncontrolling interests         (13)         (10)    (44)        (60)
     Income tax (provision) benefit    21          (15)    (83)       (262)
     Interest, net                    (79)         (41)   (194)       (164)
    Depreciation and amortization     (97)         (99)   (404)       (384)
                                      ---          ---    ----        ----
    EBITDA                            218          164     841       1,275
    >>

    <<
     Unrealized gain (loss) on
      derivatives                     (27)         (37)    (64)        578
     Realized gain on derivative
      instruments not included in
      segment income                    1            -       5           -
     Loss on early extinguishment of
      debt                            (10)           -     (84)          -
     Proportional consolidation       (14)         (21)    (45)        (52)
     Restructuring charges, net         1           (7)    (34)        (14)
     Others costs, net                (13)          (3)     (9)          8
                                      ---          ---     ---         ---
    Adjusted EBITDA                  $280         $232  $1,072        $755
                                     ====         ====  ======        ====


    >>

    <<
    The following table shows the free cash flow for the fiscal year
    ended March 31, 2011 and 2010, and the ending balances of cash and
    cash equivalents (in millions).
    >>

    <<
                                                   Year Ended
                                                    March 31,
                                                  2011    2010
                                                  ----    ----
    >>

    <<
    Net cash provided by operating activities     $454    $844
    Net cash used in investing activities         (113)   (484)
    Less: Proceeds from sales of assets            (31)     (5)
                                                   ---     ---
    Free cash flow                                $310    $355
                                                  ====    ====
    Ending cash and cash equivalents              $311    $437
                                                  ====    ====






    >>

SOURCE Novelis Inc.

For further information: Media, Charles Belbin, +1-404-760-4120, charles.belbin@novelis.com; Investors, Megan Cochard, +1-404-760-4170, megan.cochard@novelis.com Web Site: http://www.novelis.com

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