Hindalco shares drop 2% after Novelis’ Q1 net income drops 36% to $96 million

Hindalco Industries shares slid 2.2% to their day’s low of Rs 656.85 on the BSE on Tuesday after its US-based subsidiary Novelis Inc reported a 36% year-on-year decline in net income attributable to common shareholders to $96 million for Q1FY26.

Excluding special items, net income fell 43% to $116 million. Adjusted EBITDA slipped 17% to $416 million, while adjusted EBITDA per tonne dropped 18% to $432.

Net sales for the quarter ended June 30, 2025, rose 13% to $4.7 billion, driven by higher average aluminium prices and a 1% increase in total rolled product shipments to 963 kilotonnes. Higher beverage packaging shipments were partially offset by lower automotive and specialty shipments.

The fall in profitability was linked to restructuring charges, higher aluminium scrap prices, an unfavourable product mix, and net negative tariff impacts. These were partially offset by improved product pricing, lower SG&A costs, favourable metal price lag, and forex gains.

Operating cash flow increased 42% to $105 million due to lower working capital needs. Adjusted free cash flow saw an outflow of $295 million, versus a $280-million outflow last year, as capital expenditure rose to $386 million for strategic capacity expansions, including the Bay Minette, Alabama, plant.

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The company’s net leverage ratio stood at 3.2x at the end of the quarter. Total liquidity was $3 billion, comprising $1.1 billion in cash and cash equivalents and $2 billion in committed credit facilities. In June 2025, Novelis issued $400 million of tax-exempt bonds with a mandatory tender in 2032 and maturity in 2055 to fund part of the Bay Minette project.Steve Fisher, President and CEO, Novelis Inc, said, “We continue to see strong demand for aluminium beverage packaging sheet supporting topline growth and the need for new capacity under construction at our plant in Bay Minette, Alabama.”“While market headwinds, mainly from structurally higher scrap prices, negatively impacted financial performance in the quarter, we are making solid progress on our comprehensive cost reduction programme, which we expect will lower our cost base and improve our margins. We have already implemented a round of organisation redesign, footprint rationalisation and process improvement actions to drive simplification and efficiencies,” he added.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

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