Novelis (Novelis) Q2 2025 earnings summary

Executive summary

• Net sales rose 5% year-over-year to $4.3 billion in Q2FY25, driven by higher aluminum prices and record beverage packaging shipments, with total flat-rolled product shipments up 1%.

• Adjusted EBITDA declined 5% year-over-year to $462 million, mainly due to Sierre flooding and higher scrap prices; excluding Sierre impact, Adjusted EBITDA would have been up 1%.

• Net income attributable to the common shareholder fell 18% to $128 million; excluding special items, net income was $179 million, down 1% year-over-year.

• Severe flooding at the Sierre, Switzerland plant disrupted production, resulting in $101 million in charges year-to-date and an estimated $80 million net cash impact after insurance.

• Strategic investments, including the Bay Minette plant and new recycling capacity, are progressing as planned, with $1.1 billion spent to date and commissioning expected in H2 2026.

Financial highlights

• Adjusted EBITDA per tonne was $489, down 6% year-over-year.

• Adjusted free cash flow for H1 FY25 was an outflow of $345 million, mainly due to higher capital expenditures.

• Net leverage ratio at quarter-end was 2.5x; total liquidity stood at $2.1 billion.

• Year-to-date capital expenditures totaled $717 million, with FY25 CapEx expected at the lower end of $1.8–$2.1 billion.

• Net cash flow from operating activities was $374 million for the first six months, up from $290 million in the prior year.

Outlook and guidance

• Near- and long-term beverage packaging demand remains strong, with a projected 4% CAGR through 2031.

• Automotive demand outlook is mixed: softness in Europe, steady in North America, with long-term CAGR of 6% expected.

• Aerospace demand is stable, supported by OEM backlogs, though near-term OEM production is constrained; long-term CAGR of 5% expected.

• Full-year shipment growth is expected to align with market growth of about 4%.

• Near-term Adjusted EBITDA per ton guidance has been withdrawn due to scrap price volatility; management will revisit guidance once market stabilizes.