Inc.s net income narrowed in its fiscal second quarter as
overcapacity and fierce competition in the North American
beverage can market dented results.
But the Atlanta-based
aluminum roller and recycler predicted a bright fiscal second
half as its capacity shifts from the lower-margin beverage can
market, hurt in North America by declining soft drink sales, to
the more-profitable auto sector, where there is increased
aluminum demand due to stricter fuel economy standards, the
company said Nov. 11.
"We expect results in
the second half of fiscal 2014 to be stronger than the first
half," Novelis president and chief executive officer Philip
Martens said. "The reallocation of some hot mill capacity
towards high-growth, high-margin automotive sheet in this
region is not only a key piece of our growth strategy, it also
will help rebalance the North American can market."
Novelis posted net
income of $23 million for the three months ended Sept. 30, down
53.1 percent from $49 million in the same period last year
despite sales holding roughly steady at $2.43 billion. The
company shipped 713,000 tonnes of aluminum rolled products in
its fiscal second quarter, down 0.8 percent from 719,000 tonnes
a year earlier.
said competition in the mature North American market pushed the
company to accept lower-priced contracts from some beverage can
customers, and the capacity glut could drag on future
But Martens stressed
that results should improve as the company increasingly sees
the benefits of ramped-up demand for automotive sheet in North
America and Europe. The company is mulling further expansions
to meet the expected growth in automotive aluminum demand, he
"We are aggressively
increasing finishing capacity globally to support strong growth
in the automotive flat-rolled products market," Martens said.
"Our two North American finishing lines are on track to produce
commercial product by the end of this fiscal year, and we are
already evaluating additional investments."
commissioned a $200-million expansion of its rolling operations
in Oswego, N.Y., increasing the companys North American
capacity for producing aluminum sheet for the automotive
industry by 240,000 tons, five times its previous capacity in
the region (
amm.com, Oct. 25). The company has said that it is
considering additional growth to meet demand from the
automotive sector (
amm.com, Oct. 25).