Novelis First Quarter Pre-Tax Income of $273 Million Shows Significant Improvement over Previous Quarter



    
    - Cost reduction actions have begun to benefit the bottom line.

    - Shipments grew 7 percent from the previous quarter, primarily on gains
in
    Asia.

    - Liquidity increased $56 million from the previous quarter to $446
    million.






    
    ATLANTA, Aug. 3 /CNW/ -- Novelis Inc., a subsidiary of Hindalco
Industries Limited (BSE: HINDALCO), today reported pre-tax income of $273
million for the first quarter of fiscal 2010, which ended June 30, 2009.  This
represents a $211 million increase as compared to pre-tax income of $62
million for the fourth quarter of fiscal 2009.  Net income attributable to the
company's common shareholder was $143 million for the first quarter, a $159
million increase over the $16 million loss recorded in the previous quarter.
    

    (Logo:  http://www.newscom.com/cgi-bin/prnh/20070809/NOVELISLOGO )

    
    Sales in the first quarter were $1.96 billion, a one percent increase
from the fourth quarter of fiscal 2009, but a 37 percent decrease from the
$3.10 billion of sales in the first quarter of fiscal 2009 as a result of the
impact of lower metal prices and demand reductions. The average price of
aluminum on the London Metal Exchange in the first quarter of fiscal 2010 was
$1,488 per metric ton, a 9 percent increase from the fourth quarter of fiscal
2009, but a 49 percent decrease from the first quarter of fiscal 2009.

    Shipments of flat-rolled aluminum products of 650 kilotonnes represent a
7 percent increase from the fourth quarter with volume increases in Asia and
North America. Signs of economic recovery were evident in Asia where shipments
were up more than 50 percent.  Shipments in Europe were essentially flat
quarter-over-quarter, while South America experienced a slight decline.

    First-quarter results include $299 million of non-cash unrealized gains
on derivatives as compared to $145 million of gains in the fourth quarter of
fiscal 2009. These derivatives are primarily used to hedge exposures to
aluminum, mostly related to customer fixed-price contracts, other commodities
and currency.

    On a pre-tax basis, excluding the impact of non-cash unrealized gains on
derivatives, a $6 million gain on a tax litigation settlement in Brazil and $3
million of restructuring charges, the company recorded a loss of $29 million
for the first quarter of fiscal 2010.  This compares to a loss of $124 million
for the fourth quarter of fiscal 2009, which also excluded non-cash unrealized
gains on derivatives, a $122 million gain on a debt exchange transaction and
$81 million of restructuring charges.

    Other significant operational factors that created variances between the
first quarter of fiscal 2010 and the fourth quarter of fiscal 2009 include:
    

    --  A $56 million reduction in conversion costs, resulting from cost
        deflation and the company's own cost reductions and restructuring
        initiatives.  Conversion costs include direct and indirect labor,
        energy, freight, scrap usage, alloys and hardeners, coatings, alumina
        and melt loss.
    --  A $17 million benefit from the volume increase discussed above.
    --  Foreign exchange gains of $24 million related largely to the weakening
        of the U.S. dollar in Europe and Asia.

    --  These favorable variances were partially offset by $25 million in
        unfavorable metal price lag, net of realized derivatives instruments.

    
    Novelis received a net $7 million in income tax refunds during the first
quarter of fiscal 2010.
    

    Liquidity
    
    The company's estimated liquidity as of June 30, 2009; March 31, 2009;
and January 31, 2009, is as follows:


    
                                            June 30,  March 31, January 31,
     ($millions)                              2009      2009       2009
                                              ----      ----       ----
     Cash and cash equivalents                $237      $248       $190
     Overdrafts                                (10)      (11)       (19)
     Gross availability under the
      ABL facility                             299       233        255
     Borrowing availability limitation due
      to fixed charge coverage ratio           (80)      (80)       (80)
                                               ---       ---        ---
     Total estimated liquidity                $446      $390       $346
    
    Novelis' liquidity position improved during the current quarter, driven
by net cash provided by operating activities of $258 million, which was
largely offset by $223 million of cash outflows to settle derivative
instruments.

    "We are pleased with the improvement in our financial performance, aided
by our cost reduction initiatives which have begun flowing through to the
bottom line," said Phil Martens, President and Chief Operating Officer.  "We
welcome the growing signs of stability in the economy, but, with the outlook
remaining uncertain, our priorities will continue to be cost reduction, cash
management and liquidity improvement.  Additionally, we will continue to focus
on our core strengths and, in this regard, we are currently evaluating all
non-core activities."

    "In addition," continued Martens, "we have begun to implement a
realignment of key functions within Novelis to achieve greater consistency in
programs and practices across our global organization, consistent with other
world-class international companies.  The result will be a more effective
management team and an even stronger, more competitive company."

    Novelis will discuss its results via a live web and audio conference for
investors at 10:00 a.m. EDT on Monday, Aug. 3, 2009.  Access information was
previously announced in a press release and can be found at www.novelis.com.
    

    About Novelis
    
    Novelis Inc. is the global leader in aluminum rolled products and
aluminum can recycling.  The company operates in 11 countries, has
approximately 12,300 employees and reported revenue of $10.2 billion in fiscal
year 2009.  Novelis supplies premium aluminum sheet and foil products to
automotive, transportation, packaging, construction, industrial and printing
markets throughout Asia, Europe, North America and South America.  Novelis is
a subsidiary of Hindalco Industries Limited, 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.
    

    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, among
other matters, the positive outlook for our business, stabilizing market
conditions, improvement in our financial performance,  the net financial
benefit of our operating cost reduction initiatives, our ability to manage
cash and improve liquidity, our ability to implement a realignment of key
functions within Novelis to achieve greater consistency in programs and
practices across the company, and our ability to effectively manage the
business and become a stronger, more competitive company.  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 global
economic conditions, the level of our indebtedness and our ability to generate
cash; relationships with, and financial and operating conditions of, our
customers and suppliers; changes in the prices and availability of aluminum
(or premiums associated with such prices) or other materials and raw materials
we use; the effect of metal price ceilings in certain of our sales contracts;
our ability to successfully negotiate with our customers to remove or limit
metal price ceilings in our contracts; the effectiveness of our metal hedging
activities, including our internal used beverage can and smelter hedges;
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; continuing obligations and other relationships resulting
from our spin-off from Alcan; changes in the relative values of various
currencies; factors affecting our operations, such as litigation,
environmental remediation and clean-up costs, labor relations and
negotiations, breakdown of equipment and other events; 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; our ability to maintain
effective internal control over financial reporting and disclosure controls
and procedures in the future; changes in the fair value of 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,
environmental, health or safety compliance; changes in interest rates that
have the effect of increasing the amounts we pay under our principal credit
agreements and other financing arrangements; and the development of the most
efficient tax structure for the Company.  The above list of factors is not
exhaustive.  Other important risk factors are included under the caption "Risk
Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31,
2009, as filed with the SEC, and may be discussed in subsequent filings with
the SEC.  Further, the risk factors included in our Annual Report on Form 10-K
for the fiscal year ended March 31, 2009, are specifically incorporated by
reference into this news release.
    


    Exhibit I

    Novelis Inc.
    Shipments
                                 Three Months Ended
                                      June 30,
                                   --------------
                                   2009      2008
                                   ----      ----
    Shipments (kt)(A):
           Rolled products(B)       650       777
           Ingot products(C)         41        48
                                    ---       ---
           Total shipments          691       825
    


    
    (A)   One kilotonne (kt) is 1,000 metric tons. One metric ton is
          equivalent to 2,204.6 pounds.
    (B)   Rolled products shipments include tolling (the conversion of
          customer-owned metal).
    ( C ) Ingot products include primary ingot in Brazil, foundry products in
          Korea and Europe, secondary ingot in Europe and other miscellaneous
          recyclable aluminum.
    Exhibit II

    Novelis Inc.
    Condensed Consolidated Statements of Operations
    ($ in millions)
                                                     Three Months Ended
                                                          June 30,
                                                      ----------------
                                                      2009        2008
                                                      ----        ----
    

    
     Net sales                                      $1,960      $3,103
                                                    ------      ------
     Cost of goods sold (exclusive of
      depreciation and amortization shown below)     1,533       2,831
     Selling, general and administrative expenses       78          84
     Depreciation and amortization                     100         116
     Research and development expenses                   8          12
     Interest expense and amortization of debt
      issuance costs                                    43          45
     Interest income                                    (3)         (5)
     (Gain) loss on change in fair value of
      derivative instruments, net                      (72)        (65)
     Restructuring charges, net                          3          (1)
     Equity in net (income) loss of
      non-consolidated affiliates                       10           2
     Other (income) expenses, net                      (13)         23
                                                       ---         ---
                                                     1,687       3,042
                                                     -----       -----
    

    
     Income before income taxes                        273          61
     Income tax provision                              112          35
                                                       ---         ---
     Net income                                        161          26
     Net income attributable to
      non-controlling interests                        (18)         (2)
                                                       ---         ---
     Net income attributable to Novelis               $143         $24
                                                      ====         ===




    




For further information:

For further information: Media: Charles Belbin, +1-404-814-4260,
charles.belbin@novelis.com; Investors: Randy Miller, +1-404-814-4259,
randy.miller@novelis.com, both for Novelis Inc. Web Site:
http://www.novelis.com

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