Novelis canstock shipments surge on rising demand for cans

A recovery in demand for beverage cans stoked canstock shipments by Novelis, ending a year of slumping production for the largest aluminium roller and recycler in the US.

The unit of India’s Aditya Birla also benefited from rising metal prices, which helped send quarterly sales higher. However, the company warned that the next quarterly figures would be pared by a loss incurred by flood damage to a mill in Switzerland in June.

Atlanta, Georgia-based Novelis said shipments of the rolled aluminium sheet used to make beverage cans rose 8% year-on-year in the three months to the end of June to 951,000 tonnes. That pushed net sales 2% higher to US$4.2 billion and equated to a 10% increase in profit per tonne shipped to $525. Earnings before interest, depreciation, tax and amortisation – a gauge that strips out external costs – increased 19% to $500m in the company’s fiscal first quarter (Q1).

“Novelis delivered meaningful year-over-year improvement across a number of financial metrics in the quarter, led by a double-digit increase in beverage packaging shipments benefiting from normalised demand,” said chief executive Steve Fisher.

Demand for aluminium coil by canmakers has risen as the market for beverage cans rebounded from a year-long decline. Canmakers Crown, Ardagh Metal Packaging and Ball all registered stronger performance in the spring quarter as customers such as Coca-Cola increased sales of their products. 

Prices of aluminium traded on the London Metal Exchange (LME) have risen sharply in the past year after the UK and the US banned purchases of Russian-sourced supplies. In the spring quarter alone prices on the LME increased as much as 20% versus the autumn quarter last year.

Novelis is one of the world’s largest rollers and recyclers of aluminium, which it converts for the can, auto and aerospace industries from plants in North America, South America, Europe and Asia.

The company’s mill in Sierre, Switzerland, was damaged by unprecedented floods at the end of June. The cost of repairing the facility and of replacing $10m-worth of lost inventory has been estimated at $30m after insurance compensation. That will be borne in the next quarter’s results, the company said. 

Novelis is building a new $2.5bn rolling mill at Bay Minette in  Alabama which is expected to open next year with capacity to produce 600,000 tonnes of aluminium products. The company said it had attributed $348m of investment to the project in the first quarter.

The quarter was dramatic for Novelis. In May it postponed a planned initial public offering that would have seen it issue shares that would trade on the New York Stock Exchange. The company said it halted the deal, which analysts estimated would have valued the company at more than $11bn, because the market was too weak to proceed.