Novelis Reports Results for Fourth Quarter and Fiscal Year 2009



    
    - Pre-tax income of $67 million for the fourth quarter of fiscal year
2009.

    
    - Net loss of $1.9 billion for fiscal 2009 due to impairment charges of
$1.5 billion and unrealized mark-to-market losses on derivatives of $519
million, both non-cash items.

    - Fourth-quarter shipments declined 20 percent overall, but the company's
largest end-use sector, the beverage can market, remains relatively stable.

    - Actions to adjust the operating cost base to lower sales volumes,
including restructuring activities and other reductions in fixed costs, will
deliver an estimated $140 million annualized future savings.

    ATLANTA, June 29 /PRNewswire/ -- Novelis Inc., a subsidiary of Hindalco
Industries Limited (BSE: HINDALCO), today reported pre-tax income of $67
million for the fourth quarter of fiscal 2009, which ended on March 31, 2009. 
This compares to pre-tax income of $117 million for the fourth quarter of
fiscal 2008.  Fourth-quarter results include $145 million of unrealized gains
on derivatives, a $122 million gain on a debt exchange transaction and $81
million of restructuring charges.
    

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

    
    For the fiscal year 2009, the company recorded a net loss of $1.9
billion.  The loss includes non-cash, pre-tax charges of $1.5 billion for
asset impairments, $519 million of unrealized losses on derivatives which
hedge exposure to commodities and foreign currencies, and $95 million of
restructuring charges, as well as the non-cash gain on debt exchange of $122
million.  For the corresponding period of fiscal 2008, the company reported a
net loss of $117 million, including $77 million of expenses associated with
the Hindalco transaction, $7 million of restructuring charges and $3 million
of unrealized losses on derivatives.

    "We have taken broad actions in response to the economic downturn," said
Philip Martens, President and Chief Operating Officer.  "Across the
organization we have driven down our operating costs while improving cash
management and risk management.  For example, by the end of our fiscal year,
we had reduced metal inventory levels by 22 percent from the previous year. 
We estimate the net benefit of these initiatives to be an annualized future
savings of $140 million. With these actions, not only are we better able to
manage the current difficult market conditions, we are also well positioned to
benefit as the global economy recovers."

    On a pre-tax basis, excluding the impact of impairments, restructuring
charges, mark-to-market losses on derivatives and a gain on a debt exchange
transaction, the company recorded a loss of $164 million for fiscal 2009. 
This compares to income of $47 million in the prior-year period, which also
excludes $77 million of fees and compensation expense associated with the
Hindalco transaction.

    The $519 million of non-cash unrealized losses on derivatives in the
current year compares to a $3 million loss in the prior year.  These
derivatives are primarily used to hedge exposures to aluminum, mostly related
to customer fixed-price contracts, other commodities and currency.  The
magnitude of the mark-to-market loss on the company's derivative portfolio
primarily reflects the dramatic downward movement in the LME price of
aluminum. Rapidly declining aluminum prices during the second half of fiscal
2009 increased the effect of timing differences between our settlement of
aluminum forward contracts and the collection of cash from our customers.  We
expect that all of these outflows will be recovered through customer payments,
except for approximately $141 million of cash outflows related to hedges of
our exposure to metal price ceilings.
    

    Cash taxes paid during fiscal year 2009 were $65 million.

    Fourth quarter summary
    
    Sales declined 32 percent to $1.94 billion as a result of lower volumes
and decreased metal prices. Shipments of flat-rolled aluminum products
decreased 20 percent versus last year's fourth quarter to 605 kt.  Shipments
to automotive, construction and industrial markets were significantly impacted
by the economic downturn, while can sheet shipments were flat as compared to
the fourth quarter of 2008 and higher on a year-to-date basis.  These trends
affected all regions except South America where shipments were flat when
compared to the prior-year quarter.  The lower shipment volumes negatively
impacted pre-tax income by $136 million, when compared to the prior-year
quarter.

    Other significant operational factors that created variances between the
fourth fiscal quarters of the current and prior years include:
    

    --  $64 million benefit related to improved pricing and product mix; and

    --  $50 million unfavorable impact of metal price lag, net of realized
        derivatives instruments.


    Liquidity
    
    Our estimated liquidity as of May 31, 2009, March 31, 2009, and December
31, 2008, is as follows:


    
                                               May 31, March 31, December 31,
     ($ millions)                               2009      2009       2008
     Cash and cash equivalents                   $274      $248       $176
     Overdrafts                                   (13)      (11)       (22)
     Gross availability under the ABL facility    229       233        323
     Borrowing availability limitation due to
      fixed charge coverage ratio                 (80)      (80)       (80)
     Total estimated liquidity                   $410      $390       $397

    
    "Our liquidity position has remained relatively stable the past few
months despite challenging market conditions," said Steve Fisher, Senior Vice
President and Chief Financial Officer.  "We will continue to focus on
increasing our liquidity position through the first half of fiscal 2010."

    "Since the close of our 2009 fiscal year, we have begun to see the
benefits of our cost reductions and restructuring actions coming through in
our operating results," said Mr. Fisher.  "At the same time, we are encouraged
by signs of growing economic stability in our key regions and significant
improvements in Asia, driven primarily by the strength of the Chinese market."

    NOTE REGARDING COMBINED RESULTS OF OPERATIONS AND SELECTED FINANCIAL AND
OPERATING INFORMATION DUE TO THE ACQUISITION
    Under generally accepted accounting principles in the United States of
America (GAAP), the consolidated financial statements for the year ended March
31, 2008, are presented in two distinct periods as Predecessor and Successor
entities are not comparable in all material respects.  However, in order to
facilitate an understanding of our results of operations for the year ended
March 31, 2008, in comparison with the year ended March 31, 2009, our
Predecessor results and our Successor results are presented and discussed on a
combined basis.  The combined results of operations are non-GAAP financial
measures, do not include any pro-forma assumptions or adjustments and should
not be used in isolation or substitution of the Predecessor and Successor
results.

    Attached to this news release are comparative tables showing
fourth-quarter shipments (Exhibit I) as well as results of operations for the
fourth quarter (Exhibit II) and fiscal year (Exhibit III).  To facilitate
reconciliation of combined schedules to GAAP financial measures, we have
included the respective Successor and Predecessor periods in each table, as
applicable.
    

    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, the benefit of lower metal and energy prices on our profitability,
the changes in currency on our profitability, the net financial benefit of our
operating cost reduction initiatives, our ability to increase liquidity, our
ability to adjust our production levels, and the recovery of losses on hedging
instruments through lower commodity costs.  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
    

    
                                                          May 16,   April 1,
                                                           2007       2007
                 Three Months Ended  Twelve Months Ended Through    Through
                       March 31,           March 31,     March 31,   May 15,
                    2009      2008      2009     2008      2008       2007
                 Successor Successor Successor Combined Successor  Predecessor
    Shipments
     (kt)( A ):
      Rolled
       products( B )   605       754     2,770    2,988     2,640          348
      Ingot
       products( C )    47        40       173      162       147           15
      Total shipments  652       794     2,943    3,150     2,787          363
    


    
    ( 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
                                                                 March 31,
                                                              2009      2008
                                                           Successor Successor
     Net sales                                               $1,939    $2,862
     Cost of goods sold (exclusive of
      depreciation and amortization shown below)              1,606     2,577
     Selling, general and administrative expenses                73        90
     Depreciation and amortization                              109       111
     Research and development expenses                            8        12
     Interest expense and amortization of debt issuance costs    44        50
     Interest income                                             (1)       (5)
     (Gain) loss on change in fair value of derivative
      instruments, net                                           40       (94)
     Gain on extinguishment of debt                            (122)        -
     Restructuring charges, net                                  81         4
     Equity in net (income) loss of non-consolidated affiliates   6        (9)
     Other (income) expenses, net                                33         3
                                                              1,877     2,739
    

    
     Income before income taxes and minority interests' share    62       123
     Income tax provision (benefit)                              83         -
     Income (loss) before minority interests' share             (21)      123
     Minority interests' share                                    5        (6)
     Net income (loss)                                         $(16)     $117
    



    Exhibit III

    
    Novelis Inc.
    Condensed Consolidated Statements of Operations
    ($ in millions)
    

    
                                                          May 16,   April 1,
                                                           2007       2007
                                          Year Ended      Through    Through
                                           March 31,     March 31,   May 15,
                                         2009     2008     2008       2007
                                      Successor Combined Successor Predecessor
     Net sales                         $10,177   $11,246   $9,965     $1,281
     Cost of goods sold (exclusive of
      depreciation and amortization
      shown below)                       9,251    10,247    9,042      1,205
     Selling, general and administrative
      expenses                             319       414      319         95
     Depreciation and amortization         439       403      375         28
     Research and development expenses      41        52       46          6
     Interest expense and amortization
      of debt issuance costs               182       218      191         27
     Interest income                       (14)      (19)     (18)        (1)
     (Gain) loss on change in fair value
      of derivative instruments, net       556       (42)     (22)       (20)
     Impairment of goodwill              1,340         -        -          -
     Gain on extinguishment of debt       (122)        -        -          -
     Restructuring charges, net             95         7        6          1
     Equity in net (income) loss of
      non-consolidated affiliates          172       (26)     (25)        (1)
     Other (income) expenses, net           86        47       (6)        35
                                        12,345    11,283    9,908      1,375
    

    
     Income (loss) before income taxes
      and minority interests' share     (2,168)      (37)      57        (94)
     Income tax provision (benefit)       (246)       77       73          4
     Loss before minority interests'
      share                             (1,922)     (114)     (16)       (98)
     Minority interests' share              12        (3)      (4)         1
     Net loss                          $(1,910)    $(117)    $(20)      $(97)


    




For further information:

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

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