Novelis Reports Record Financial Results for Fiscal Year 2010


    


    ATLANTA, May 27 /CNW/ --

    --  Net Income of $405 million
    --  Record Adjusted EBITDA of $754 million, up 55%
    --  Solid Liquidity of $1 billion, up 163%
    --  Strong Free Cash Flow of $355 million
    --  Announces expansion in Brazil to meet increasing demand

    
</pre>
<p>Novelis Inc., the world's leading producer of aluminum rolled products, today reported net income attributable to its common shareholder of <span class="xn-money">$405 million</span> for fiscal year 2010, a significant increase when compared to the net loss of <span class="xn-money">$1.9 billion</span> reported for the same period a year ago.</p>
<pre>
    

    (Logo: http://www.newscom.com/cgi-bin/prnh/20100527/CL11716LOGO )

    
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    (in $M)                 Year-Ended        Quarter-Ended
                      3/31/2010   3/31/2009  3/31/2010   3/31/2009
    Net Income (loss)      $405     ($1,910)       ($1)       ($16)
    Adjusted EBITDA        $754        $486       $231         $53
    ---------------        ----        ----       ----         ---


    
</pre>
<p>"This was an unprecedented year for the Company," said <span class="xn-person">Phil Martens</span>, Novelis President and COO.  "I am very proud of our accomplishments, which enabled us to achieve record results both for the fourth quarter and full year despite challenging economic and market conditions.  This was a result of our ongoing and unwavering commitment to cost reduction and restructuring initiatives, efficiency improvements and more favorable contract terms."</p>
<p/>
<p>"These changes are structural and sustainable," added Martens.  "In 2009, we set a target of annualized costs savings of <span class="xn-money">$140 million</span> and we have achieved this goal almost two full quarters ahead of schedule."</p>
<p/>
<p>Shipments of aluminum rolled products totaled 2,708 kilotonnes for fiscal 2010, a decrease of 2 percent compared to shipments of 2,770 kilotonnes in the previous year, driven by softer end-market conditions in most of our regions during the first half of the year.  For the fourth quarter, shipments were 716 kilotonnes, an increase of 18 percent from shipments of 605 kilotonnes in the fourth quarter of the previous year, primarily due to strong growth in <span class="xn-location">North America</span>, <span class="xn-location">Europe</span> and Asia.  The fourth quarter of 2010 represented the first quarter since the economic downturn that shipments grew in all four regions year-over-year.</p>
<p/>
<p>Net sales for fiscal 2010 were <span class="xn-money">$8.7 billion</span>, a decrease of 15 percent compared to the <span class="xn-money">$10.2 billion</span> reported in the same period a year ago, a result of lower aluminum prices and softness in the Company's end-markets in the first half of the year.  Net sales for this year's fourth quarter were <span class="xn-money">$2.4 billion</span>, a 25 percent increase when compared to the fourth quarter of last year, driven primarily by higher aluminum prices and stronger demand.</p>
<p/>
<p>Adjusted EBITDA for the year was a record <span class="xn-money">$754 million</span>, representing a 55 percent increase from adjusted EBITDA of <span class="xn-money">$486 million</span> posted for the same period a year ago.  For the fourth quarter, adjusted EBITDA was <span class="xn-money">$231 million</span>, a 336 percent increase compared to the same period in the previous year and the highest ever in the Company's history.  These record operating results were primarily due to the Company's focus on cost reductions and restructuring initiatives.</p>
<p/>
<p> </p>
<p> </p>
<p> </p>
<pre>
    
    (in $M)
                                           3/31/2010   3/31/2009
      Cash and cash equivalents                   $437        $248
      Overdrafts                                   (14)        (11)
      Gross availability under the ABL
       facility                                    603         233
      Borrowing availability
       limitation due to fixed                       -         (80)
       charge coverage ratio
    Total Liquidity                             $1,026        $390
    ---------------                           ------        ----


    
</pre>
<p>Liquidity improved to over <span class="xn-money">$1 billion</span> at the end of fiscal year 2010, representing an increase of 163 percent from <span class="xn-money">$390 million</span> in liquidity reported at the end of fiscal year 2009.</p>
<p/>
<p>For fiscal 2010, free cash flow was <span class="xn-money">$355 million</span>, representing a substantial increase when compared to the negative free cash flow of <span class="xn-money">$352 million</span> for fiscal 2009, driven by stronger performance, working capital improvements and controlled capital expenditure levels.</p>
<p/>
<p><span class="xn-person">Steve Fisher</span>, Chief Financial Officer for Novelis, pointed to the significant progress the Company made in improving its liquidity position over the past year.  "As of <span class="xn-chron">March 31</span>, our liquidity position has nearly tripled compared to the previous year, reaching over <span class="xn-money">$1 billion</span>," said Fisher.  "In one year, we've added over <span class="xn-money">$600 million</span> in liquidity through solid working capital management, realizing the benefits from our cost reduction initiatives and through the net proceeds of the <span class="xn-money">$185 million</span> offering of Senior Unsecured Notes in August."</p>
<pre>
    

    Business Outlook
    
</pre>
<p>Going forward, the Company expects <span class="xn-location">South America</span> and Asia to continue to grow and <span class="xn-location">North America</span> and <span class="xn-location">Europe</span> to see moderate increases in demand.  To debottleneck its facilities and increase capacity, primarily in <span class="xn-location">South America</span> and Asia, Novelis has increased its capital expenditures plan by approximately <span class="xn-money">$150 million</span> or 148 percent for fiscal 2011 compared to the prior year.  A significant amount is aimed at expanding its rolling operations in <span class="xn-location">Brazil</span>.  This investment will increase capacity by over 50 percent and better support its customer's increasing demand for flat rolled products in the region.  The expansion is expected to be completed by late 2012.</p>
<p/>
<p>"As a result of our financial position, we are now able to invest strategically to capitalize on future growth in one of our most important regions," said <span class="xn-person">Phil Martens</span>.  "In addition, we expect our results to continue to strengthen given market conditions, price increases and continued cost management initiatives."</p>
<pre>
    

    Annual Report on Form 10-K
    
</pre>
<p>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 discussion of the Company's financial position and results through <span class="xn-chron">March 31, 2010</span>.  The Novelis Form 10-K and other SEC filings are available for review on the Company's website at <a href="http://www.novelis.com">www.novelis.com</a>.</p>
<pre>
    

    Fourth Quarter & Fiscal 2010 Earnings Conference Call
    
</pre>
<p>Novelis will discuss its fourth quarter and fiscal 2010 results via a live webcast and conference call for investors at <span class="xn-chron">9:00 a.m. EDT</span> on <span class="xn-chron">Thursday, May 27, 2010</span>.  Participants may access the webcast at <a href="https://cc.callinfo.com/r/1nxne2ria6o3r">https://cc.callinfo.com/r/1nxne2ria6o3r</a>.  To join by telephone, dial toll-free in <span class="xn-location">North America</span> at 800 954 0626, <span class="xn-location">India</span> toll-free at 0008001007012 or the international toll line at +1 212 231 2901.  Access information may also be found at <a href="http://www.novelis.com/investors">www.novelis.com/investors</a>.</p>
<pre>
    

    About Novelis
    
</pre>
<p>Novelis Inc. is the global leader in aluminum rolled products and aluminum can recycling.  The Company operates in 11 countries, has approximately 11,600 employees and reported revenue of <span class="xn-money">$8.7 billion</span> in fiscal year 2010.  Novelis supplies premium aluminum sheet and foil products to automotive, transportation, packaging, construction, industrial, electronics and printing markets throughout <span class="xn-location">North America</span>, <span class="xn-location">Europe</span>, Asia, and <span class="xn-location">South America</span>.  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 <span class="xn-location">Mumbai</span>, <span class="xn-location">India</span>.  For more information, please visit <a href="http://www.novelis.com">www.novelis.com</a>.</p>
<pre>
    

    Non-GAAP Financial Measures
    
</pre>
<p>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.</p>
<p/>
<p>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.</p>
<pre>
    

    Forward-Looking Statements
    
</pre>
<p>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, improvement in our financial performance, the impact of operational efficiency initiatives, the projected growth in demand for aluminum rolled products, and the positioning of the company to take advantage of such growth in demand for aluminum rolled products.  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: the level of our indebtedness and our ability to generate cash; 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; 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 to fund current operations and for future capital requirements; changes in interest rates under our floating rate debt; 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; 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;  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 and tax rates, climate change, 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; and the effect of taxes and changes in tax rates. The above list of factors is not exhaustive.  Other important risk factors included under the caption "Risk Factors" in Annual Report on Form 10-K for the year ended <span class="xn-chron">March 31, 2010</span> are specifically incorporated by reference into this news release.</p>
<pre>
    


    
</pre>
<p> </p>
<p>                              Novelis Inc.</p>
<p> </p>
<pre>
    
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In millions, except per share amounts)
                                   (unaudited)
    
</pre>
<p> </p>
<pre>
    
                                             Quarter
                                              Ended           Year Ended
                                            March 31,         March 31,
                                            ---------         ---------
                                          2010    2009    2010      2009
                                          ----    ----    ----      ----
    
</pre>
<p> </p>
<pre>
    
    Net sales                           $2,420  $1,939  $8,673   $10,177
                                        ------  ------  ------   -------
    Cost of goods sold (exclusive of
     depreciation and amortization
     shown below)                        2,141   1,606   7,190     9,251
    Selling, general and administrative
     expenses                              100      73     360       319
    Depreciation and amortization           99     109     384       439
    Research and development expenses       11       8      38        41
    Interest expense and amortization
     of debt issuance costs                 44      44     175       182
    Interest income                         (3)     (1)    (11)      (14)
    (Gain) loss on change in fair value
     of derivative instruments, net         (2)     40    (194)      556
    Impairment of goodwill                   -       -       -     1,340
    Gain on extinguishment of debt           -    (122)      -      (122)
    Restructuring charges, net               7      81      14        95
    Equity in net (income) loss of non-
     consolidated affiliates                 3       6      15       172
    Other (income) expenses, net            (4)     33     (25)       86
                                           ---     ---     ---       ---
                                         2,396   1,877   7,946    12,345
                                         -----   -----   -----    ------
    Income (loss) before income taxes       24      62     727    (2,168)
    Income tax provision (benefit)          15      83     262      (246)
                                           ---     ---     ---      ----
    Net income (loss)                        9     (21)    465    (1,922)
    Net income (loss) attributable to
     noncontrolling interests               10      (5)     60       (12)
                                           ---     ---     ---       ---
    Net income (loss) attributable to
     our common shareholder                $(1)   $(16)   $405   $(1,910)
                                           ===    ====    ====   =======



    
</pre>
<p> </p>
<p>                           Novelis Inc.</p>
<p> </p>
<pre>
    
                        CONSOLIDATED BALANCE SHEETS
                  (In millions, except number of shares)
                                (unaudited)
    
</pre>
<p> </p>
<pre>
    
                                                              March 31,
                                                              ---------
                                                             2010      2009
                                                             ----      ----
    
</pre>
<p> </p>
<pre>
    
                                     ASSETS
    Current assets
    Cash and cash equivalents                                $437      $248
    Accounts receivable (net of allowances of $4 and $2 as of
     March 31, 2010 and 2009, respectively)
     - third parties                                        1,143     1,049
     - related parties                                         24        25
    Inventories, net                                        1,083       793
    Prepaid expenses and other current assets                  39        51
    Fair value of derivative instruments                      197       119
    Deferred income tax assets                                 12       216
                                                              ---       ---
     Total current assets                                   2,935     2,501
    Property, plant and equipment, net                      2,635     2,784
    Goodwill                                                  611       582
    Intangible assets, net                                    746       802
    Investment in and advances to non-consolidated
     affiliates                                               709       719
    Fair value of derivative instruments, net of current
     portion                                                    7        72
    Deferred income tax assets                                  5         4
    Other long-term assets
     - third parties                                           93        80
     - related parties                                         21        23
                                                              ---       ---
     Total assets                                          $7,762    $7,567
                                                           ======    ======
                     LIABILITIES AND SHAREHOLDER'S EQUITY
    Current liabilities
    Current portion of long-term debt                        $106       $51
    Short-term borrowings                                      75       264
    Accounts payable
     - third parties                                        1,076       725
     - related parties                                         53        48
    Fair value of derivative instruments                      110       640
    Accrued expenses and other current liabilities            436       516
    Deferred income tax liabilities                            34         -
                                                              ---       ---
     Total current liabilities                              1,890     2,244
    Long-term debt, net of current portion
     - third parties                                        2,490     2,417
     - related party                                            -        91
    Deferred income tax liabilities                           497       469
    Accrued postretirement benefits                           499       495
    Other long-term liabilities                               376       342
                                                              ---       ---
                                                            5,752     6,058
                                                            -----     -----
    Commitments and contingencies
    Shareholder's equity
    Common stock, no par value; unlimited number of
     shares authorized; 77,459,658  shares issued and
     outstanding as of March 31, 2010 and 2009,
     respectively                                               -         -
    Additional paid-in capital                              3,497     3,497
    Accumulated deficit                                   (1,525)    (1,930)
    Accumulated other comprehensive income (loss)            (103)     (148)
                                                             ----      ----
     Total equity of our common shareholder                 1,869     1,419
    Noncontrolling interests                                  141        90
                                                              ---       ---
     Total equity                                           2,010     1,509
                                                            -----     -----
     Total liabilities and equity                          $7,762    $7,567
                                                           ======    ======



    
</pre>
<p> </p>
<p>                         Novelis Inc.</p>
<p> </p>
<pre>
    
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In millions)
                             (unaudited)
    
</pre>
<p> </p>
<pre>
    
                                                      Year Ended
                                                      ----------
                                                March 31,  March 31,
                                                     2010       2009
                                                     ----       ----
    
</pre>
<p> </p>
<pre>
    
    OPERATING ACTIVITIES
    Net income (loss)                                $465    $(1,922)
    Adjustments to determine net cash provided
     by (used in) operating activities:
     Depreciation and amortization                    384        439
      (Gain) loss on change in fair value of
       derivative instruments, net                   (194)       556
     Non-cash restructuring charges, net                2         22
     Gain on extinguishment of debt                     -       (122)
     Deferred income taxes                            229       (331)
     Write-off and amortization of fair value
      adjustments, net                               (134)      (233)
     Impairment of goodwill                             -      1,340
     Equity in net (income) loss of non-
      consolidated affiliates                          15        172
     Foreign exchange remeasurement on debt           (20)        26
     Gain on reversal of accrued legal claim           (3)       (26)
     Other, net                                        11          8
     Changes in assets and liabilities (net of
      effects from acquisitions and
      divestitures):
     Accounts receivable                              (46)        73
     Inventories                                     (264)       466
     Accounts payable                                 311       (643)
     Other current assets                              14         (6)
     Other current liabilities                         47        (63)
     Other noncurrent assets                          (15)        17
     Other noncurrent liabilities                      42          7
                                                      ---        ---
    Net cash provided by (used in) operating
     activities                                       844       (220)
                                                      ---       ----
    INVESTING ACTIVITIES
    Capital expenditures                             (101)      (145)
    Proceeds from sales of assets                       5          5
    Changes to investment in and advances to
     non-consolidated affiliates                        3         20
    Proceeds from related party loans
     receivable, net                                    4         17
    Net proceeds from settlement of derivative
     instruments                                     (395)       (24)
                                                     ----        ---
    Net cash used in investing activities            (484)      (127)
                                                     ----       ----
    FINANCING ACTIVITIES
    Proceeds from issuance of debt
     - third parties                                  177        263
     - related parties                                  4         91
    Principal repayments
     - third parties                                  (67)      (235)
     - related parties                                (95)         -
    Short-term borrowings, net                       (193)       176
    Dividends                                         (13)        (6)
    Debt issuance costs                                (1)        (3)
    Net cash provided by (used in) financing
     activities                                      (188)       286
                                                     ----        ---
    Net increase (decrease) in cash and cash
     equivalents                                      172        (61)
    Effect of exchange rate changes on cash
     balances held in foreign currencies               17        (17)
    Cash and cash equivalents - beginning of
     period                                           248        326
                                                      ---        ---
    Cash and cash equivalents - end of period        $437       $248
                                                     ====       ====



    
</pre>
<p> </p>
<pre>
    
    Reconciliation from Net Income (Loss) Attributable to our Common
    Shareholder to Adjusted EBITDA
    
</pre>
<p> </p>
<pre>
    
    Novelis is providing disclosure of the reconciliation of reported
    non-GAAP financial measures to their comparable financial measures
    on a GAAP basis.
    
</pre>
<p> </p>
<pre>
    
    (in millions)                   Quarter Ended       Year Ended
                                    -------------       ----------
                                      March 31           March 31,
                                      --------           ---------
                                    2010     2009   2010       2009
                                    ----     ----   ----       ----
    Net income (loss) attributable
     to our common shareholder       $(1)    $(16)  $405    $(1,910)
     Noncontrolling interests        (10)       5    (60)        12
     Income tax (provision) benefit  (15)     (83)  (262)       246
     Interest, net                   (41)     (43)  (164)      (168)
    Depreciation and amortization    (99)    (109)  (384)      (439)
                                     ---     ----   ----       ----
    EBITDA                           164      214  1,275     (1,561)
    
</pre>
<p> </p>
<pre>
    
     Unrealized gain (loss) on
      derivatives                    (37)     145    578       (519)
     Impairment charges                -        -      -     (1,500)
     Gain on extinguishment of debt    -      122      -        122
     Proportional consolidation      (20)     (16)   (51)       (66)
     Restructuring charges, net       (7)     (81)   (14)       (95)
     Others costs, net                (3)      (9)     8         11
                                     ---      ---    ---        ---
    Adjusted EBITDA                 $231      $53   $754       $486
                                    ====      ===   ====       ====



    
</pre>
<p> </p>
<pre>
    
    The following table shows the free cash flow for the fiscal year
    ended March 31, 2010 and 2009, the change between periods as well as
    the ending balances of cash and cash equivalents (in millions).
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                  Year Ended
                                  March 31,
                                  ---------
                                  2010      2009
                                  ----      ----
    
</pre>
<p> </p>
<pre>
    
    Net cash provided by
     (used in) operating
     activities                   $844     $(220)
    Net cash used in
     investing activities         (484)     (127)
    Less: Proceeds from
     sales of assets                (5)       (5)
                                   ---       ---
    Free cash flow                $355     $(352)
                                  ====     =====
    Ending cash and cash
     equivalents                  $437      $248
                                  ====      ====





    

For further information: For further information: Charles Belbin, +1-404-814-4260, charles.belbin@novelis.com; Isabel Janci, +1-404-814-4730, isabel.janci@novelis.com Web Site: http://www.novelis.com

Organization Profile

Novelis Inc.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890