Higher aluminum scrap prices result in 13 percent sales increase for Novelis in Q1 2026
Although higher product prices were offset by a net negative tariff impact, the company reported $4.7 billion in the first fiscal quarter
Novelis Inc. provides sustainable aluminum solutions like rolling and recycling driven by the purpose of shaping a more sustainable world. In a recent financial report, Novelis shared its results from the first quarter of fiscal year 2026, noting strong sales amid higher aluminum prices.
First quarter fiscal year 2026 financial highlights
Net sales for the first quarter of fiscal year 2026 increased 13 percent versus the prior year period to $4.7 billion, mainly driven by higher average aluminum prices and a 1 percent increase in total rolled product shipments compared to the prior year period to 963 kilotonnes. Higher beverage packaging shipments were partially offset by lower automotive and specialty shipments.
Net income attributable to the common shareholder decreased 36 percent versus the prior year to $96 million in the first quarter of fiscal year 2026, primarily driven by restructuring charges and lower operating performance, partially offset by favourable metal price lag. Net income attributable to the common shareholder, excluding special items, decreased 43 percent year-over-year to $116 million and Adjusted EBITDA decreased 17 percent to $416 million in the first quarter of fiscal year 2026. These decreases were primarily driven by higher aluminum scrap prices, unfavorable product mix, and a net negative tariff impact, partially offset by higher product pricing, lower SG&A costs and favorable foreign exchange. Adjusted EBITDA per tonne was down 18 percent year-over-year to $432.
Net cash flow provided by operating activities increased 42 percent to $105 million in the first three months of fiscal year 2026, primarily due to lower net working capital, partially offset by lower Adjusted EBITDA. Adjusted free cash flow was an outflow of $295 million in the first three months of fiscal year 2026, compared to the prior year period outflow of $280 million, with higher capital expenditures partially offset by higher net cash flow provided by operating activities. Total capital expenditures were $386 million for the first three months of fiscal year 2026, primarily attributed to strategic investments in new rolling and recycling capacity under construction, most notably in the U.S. for Novelis' new greenfield rolling and recycling plant in Bay Minette, Alabama.
Novelis had a net leverage ratio (Adjusted Net Debt / trailing twelve months (TTM) Adjusted EBITDA) of 3.2x at the end of the first quarter of fiscal year 2026. Total liquidity stood at $3.0 billion as of June 30, 2025, consisting of $1.1 billion in cash and cash equivalents and $2.0 billion in availability under committed credit facilities. In June 2025, Novelis issued $400 million of tax-exempt bonds with a mandatory tender for purchase in 2032 and maturation in 2055, with the proceeds to be used to finance a portion of the construction costs at Bay Minette.
"We continue to see strong demand for aluminum beverage packaging sheet supporting top-line growth and the need for new capacity under construction at our plant in Bay Minette, Alabama," said Steve Fisher, president and CEO, Novelis Inc. "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 program, which we expect will lower our cost base and improve our margins. We have already implemented a round of organization redesign, footprint rationalization and process improvement actions to drive simplification and efficiencies. We believe these actions will accelerate anticipated run-rate cost savings to over $100 million by the end of this fiscal year, exceeding our previously estimated target of approximately $75 million."
"We are finding opportunities to streamline our cost structure in response to the challenging external environment, freeing up resources that can be invested to meet continued growing market demand for low-carbon, more sustainable aluminum products," said Dev Ahuja, executive vice president and CFO, Novelis Inc.
