LONDON Aluminum sheet producer Novelis Inc.s net income plunged in the three months ended June 30 due to low aluminum prices and disappointing demand for can sheet.
"Novelis faced continued pricing headwinds and softer-than-expected demand for beverage can sheet partially driven by unfavorable weather conditions," the Atlanta-based company said.
Novelis posted net income of $14 million for its fiscal first quarter, down 84.6 percent from $91 million in the same period last year, on sales that fell 5.6 percent to just under $2.41 billion as shipments of rolled products slid 2 percent to 708,000 tonnes.
"Despite the challenges we faced in the first quarter, we maintained financial discipline through good cost control and will continue this focus on cost containment going forward," Novelis president and chief executive officer Philip Martens said in a statement.
The company expects a "transitional year" ahead, when several major projects will be commissioned, including a $340-million expansion in Pindamonhangaba, Brazil; an aluminum recycling center in Nachterstedt, Germany; and new hot- and cold-rolling mills in South Korea, which it began commissioning in July. Novelis also began commissioning its two new automotive finishing lines in the United States last month, which add 240,000 tonnes of automotive sheet capacity.
"As expected, we had negative cash flow in our (fiscal) first quarter primarily as a result of continued investment in our strategic expansions and $107 million in semi-annual bond interest payments," chief financial officer Steve Fisher said in a statement. "Weve made good progress reducing inventory levels at the end of the quarter and are continuing to drive working capital efficiencies and take other actions to improve free cash flow going forward."
A version of this article was first published by AMM sister publication Metal Bulletin.