Novelis Reports Third Quarter of Fiscal Year 2013 Results

-- Net Income, Excluding Certain Items, of $8 million 
-- Adjusted EBITDA of $185 million 
-- Liquidity of $775 million 
-- Global Expansions Progressing Well; Commissions Rolling Mill Expansion in 
Brazil and Fully-Integrated Recycling Center in Korea, Broke Ground in China 
and Germany 
ATLANTA, Feb. 12, 2013 /CNW/ - Novelis Inc., the world's leading producer of 
aluminum rolled products, today reported net income attributable to its common 
shareholder of $3 million for the third quarter of fiscal 2013.  Excluding 
tax-effected restructuring in both periods, net income for the third quarter 
of 2013 was $8 million, compared to a net loss of $11 million for the same 
period in 2012. 
Adjusted EBITDA was $185 million for the third quarter of 2013, compared to 
$213 million reported for the same period in 2012.  This decline was primarily 
due to the implementation of an Enterprise Resource Planning (ERP) system 
which resulted in lost shipments, reduced productivity and stabilization 
costs, and negatively impacted the third quarter of fiscal 2013 by 
approximately $39 million.  In addition, the Company experienced unfavorable 
pricing dynamics in several regions, higher metal input costs in North 
America, and incremental project start-up costs associated with its global 
expansions. 
Phil Martens, Novelis President and Chief Executive Officer commented, "The 
third quarter was challenging as we experienced more production disruptions 
than expected related to our ERP implementation in North America.  These 
implementation issues are largely behind us and production has returned to 
near normal levels." 
"This is a heavy investment period for us that is necessary to maintain and 
grow our leadership position in the industry and allow us to capitalize on the 
significant growth we see ahead in our key end-markets," said Martens.  "While 
we were disappointed with our results in the third quarter, we are pleased 
with the strong execution of our strategy.  In fact, Brazil is a good example 
of this, with record shipments and the successful commissioning of our rolling 
expansion in the region." 
Shipments of aluminum rolled products totaled 647 kilotonnes for the third 
quarter of fiscal 2013, flat compared to shipments of 648 kilotonnes for the 
same period last year. 
Net sales for the third quarter of fiscal 2013 were $2.3 billion, a 6 percent 
decrease compared to the $2.5 billion reported in the same period a year ago, 
which included sales from the Company's three foil plants in Europe that were 
divested.  In addition, sales were also impacted by lower conversion premiums 
as well as lower average aluminum prices when compared to last year. 
(in $M)                             Q3FY13       Q2FY13 
                                12/31/2012   9/30/2012 
Cash and cash equivalents           $ 340        $ 227 
Availability under the ABL facility 435          695 
Total Liquidity                     $ 775        $ 922 
(in $M)                     Q3FY13      Q3FY12 


                            12/31/2012  12/31/2011

Free Cash Flow              $ (309)     $ 63

CapEx                       193         123

Free Cash Flow before CapEx $ (116)     $ 186

For the third quarter of fiscal 2013, Novelis reported liquidity of $775 
million.  "Despite our semi-annual bond interest payment and our substantial 
capital expenditure program, we reported solid liquidity in the quarter," said 
Steve Fisher, SVP and Chief Financial Officer of Novelis.  Free cash flow was 
a negative $309 million for the third quarter of 2013, primarily due to 
capital expenditures of $193 million, a $107 million bond interest payment and 
negative changes in working capital.

Strategic Expansions & Footprint Optimization   The Company continues to make 
progress on its strategy.  In October, it began the commissioning process at 
its 265 kilotonne fully-integrated recycling facility in Korea, Asia's largest 
beverage can recycling center.   In November, it broke ground on a 120 
kilotonne automotive heat treatment line, the first of its kind in China, and 
the world's largest 400 kilotonne aluminum recycling and casting center in 
Germany.  In December, it began the commissioning process at its Pinda mill in 
Brazil, which will add an incremental 220 kilotonnes of capacity once fully 
operational over the next two to three years, bringing total rolling capacity 
in South America to approximately 600 kilotonnes.

In addition, in line with the Company's strategy to divest or close non-core 
or underperforming assets, in January, it announced the closure of a pot line 
at its Ouro Preto smelter in Brazil as it is no longer competitive to operate.

Business Outlook   Going forward, the Company sees solid demand across its 
regions and key end-market segments. It expects operating performance to 
improve, with fourth quarter of fiscal 2013 EBITDA above fourth quarter of 
fiscal 2012.

Quarterly Report on Form 10-Q   The results described in this press release 
have been reported in detail on the Company's Form 10-Q on file with the SEC, 
and investors are directed to that document for a complete explanation of the 
Company's financial position and results through December 31, 2012.  The 
Novelis Form 10-Q and other SEC filings are available for review on the 
Company's website at www.novelis.com.

Third Quarter of Fiscal 2013 Earnings Conference Call   Novelis will discuss 
its third quarter of fiscal 2013 results via a live webcast and conference 
call for investors at 9:00 a.m. ET on Tuesday, February 12, 2013.  
Participants may access the webcast at 
https://cc.callinfo.com/r/1cp05dopcfmnp.  To join by telephone, dial toll-free 
in North America at 800 381 7839, India toll-free at 0008001007108 or the 
international toll line at +1 212 231 2901.  Access information may also be 
found at www.novelis.com/investors.

About Novelis   Novelis Inc. is the global leader in aluminum rolled products 
and the world's largest recycler of aluminum. For fiscal year 2012, the 
company operated in 11 countries, had more than 11,000 employees and reported 
revenue of $11.1 billion. Novelis supplies premium aluminum sheet and foil 
products to automotive, transportation, packaging, construction, industrial, 
electronics and printing markets throughout North America, Europe, Asia and 
South America. Novelis is a subsidiary of Hindalco Industries Limited (BSE: 
HINDALCO), one of Asia's largest integrated producers of aluminum and a 
leading copper producer.  Hindalco is a flagship company of the Aditya Birla 
Group, a multinational conglomerate based in Mumbai, India. For more 
information, visit www.novelis.com and follow us on Twitter at 
twitter.com/Novelis.

Non-GAAP Financial Measures   This press release and the presentation slides 
for the earnings call contain non-GAAP financial measures as defined by SEC 
rules.  We think that these measures are helpful to investors in measuring our 
financial performance and liquidity and comparing our performance to our 
peers.  However, our non-GAAP financial measures may not be comparable to 
similarly titled non-GAAP financial measures used by other companies.  These 
non-GAAP financial measures have limitations as an analytical tool and should 
not be considered in isolation or as a substitute for GAAP financial measures. 
 To the extent we discuss any non-GAAP financial measures on the earnings 
call, a reconciliation of each measure to the most directly comparable GAAP 
measure will be available in the presentation slides filed as Exhibit 99.2 to 
our Current Report on Form 8-K furnished to the SEC concurrent with the 
issuance of this press release. In addition, the Form 8-K includes a more 
detailed description of each of these non-GAAP financial measures, together 
with a discussion of the usefulness and purpose of such measures.

Attached to this news release are tables showing the Condensed Consolidated 
Statements of Operations, Condensed Consolidated Balance Sheets, Condensed 
Consolidated Statements of Cash Flows, Reconciliation to Net Income excluding 
Certain Items, Reconciliation to Adjusted EBITDA and Free Cash Flow.

Forward-Looking Statements    Statements made in this news release which 
describe Novelis' intentions, expectations, beliefs or predictions may be 
forward-looking statements within the meaning of securities laws.  
Forward-looking statements include statements preceded by, followed by, or 
including the words "believes," "expects," "anticipates," "plans," 
"estimates," "projects," "forecasts," or similar expressions.  An example of 
forward looking statements in this new release is our expectation that fourth 
quarter fiscal 2013 EBITDA will exceed fourth quarter fiscal 2012 EBITDA.  
Novelis cautions that, by their nature, forward-looking statements involve 
risk and uncertainty and that Novelis' actual results could differ materially 
from those expressed or implied in such statements.  We do not intend, and we 
disclaim any obligation, to update any forward-looking statements, whether as 
a result of new information, future events or otherwise.  Factors that could 
cause actual results or outcomes to differ from the results expressed or 
implied by forward-looking statements include, among other things: changes in 
the prices and availability of aluminum (or premiums associated with such 
prices) or other materials and raw materials we use; the capacity and 
effectiveness of our metal hedging activities, including our internal used 
beverage cans (UBCs) and smelter hedges; relationships with, and financial and 
operating conditions of, our customers, suppliers and other stakeholders; 
fluctuations in the supply of, and prices for, energy in the areas in which we 
maintain production facilities; our ability to access financing for future 
capital requirements; changes in the relative values of various currencies and 
the effectiveness of our currency hedging activities; factors affecting our 
operations, such as litigation, environmental remediation and clean-up costs, 
labor relations and negotiations, breakdown of equipment and other events; the 
impact of restructuring efforts in the future; economic, regulatory and 
political factors within the countries in which we operate or sell our 
products, including changes in duties or tariffs; competition from other 
aluminum rolled products producers as well as from substitute materials such 
as steel, glass, plastic and composite materials; changes in general economic 
conditions including deterioration in the global economy, particularly sectors 
in which our customers operate; changes in the fair value of derivative 
instruments; cyclical demand and pricing within the principal markets for our 
products as well as seasonality in certain of our customers' industries; 
changes in government regulations, particularly those affecting taxes, 
derivative instruments, environmental, health or safety compliance; changes in 
interest rates that have the effect of increasing the amounts we pay under our 
principal credit agreement and other financing agreements; the effect of taxes 
and changes in tax rates; our indebtedness and our ability to generate cash. 
The above list of factors is not exhaustive.  Other important risk factors 
included under the caption "Risk Factors" in our Annual Report on Form 10-K 
for the fiscal year ended March 31, 2012 and our Quarterly Report on Form 10-Q 
for the quarter ended December 31, 2012, are specifically incorporated by 
reference into this news release.

Novelis Inc.  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)  (In 
millions)
                                 Three Months Ended  Nine Months Ended
                                 December 31,        December 31,
                                 2012      2011      2012      2011
                                 (unaudited)         (unaudited)

Net sales                        $ 2,321   $ 2,462   $ 7,312   $ 8,455

Cost of goods sold (exclusive of 2,036     2,224     6,315     7,481
depreciation and amortization)

Selling, general and             101       95        305       281
administrative expenses

Depreciation and amortization    76        79        218       249

Research and development         11        10        36        34
expenses

Interest expense and
amortization of debt issuance    76        74        223       228
costs

Gain on assets held for sale     —   —   (3)       —

Restructuring charges, net       5         1         26        31

Equity in net loss of            10        4         15        9
non-consolidated affiliates

Other income, net                (8)       (4)       (36)      (96)
                                 2,307     2,483     7,099     8,217

Income (loss) before income      14        (21)      213       238
taxes

Income tax provision (benefit)   11        (10)      69        42

Net income (loss)                3         (11)      144       196

Net income attributable to       —   1         1         26
noncontrolling interests

Net income (loss) attributable   $ 3       $ (12)    $ 143     $ 170
to our common shareholder

Novelis Inc.  CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In millions)
                                      December 31, 2012  March 31, 2012

ASSETS

Current assets

Cash and cash equivalents             $ 340              $ 317

Accounts receivable, net

— third parties (net of
allowances of $5 as of December 31,   1,271              1,331
2012 and March 31, 2012)

— related parties               28                 36

Inventories                           1,222              1,024

Prepaid expenses and other current    80                 61
assets

Fair value of derivative instruments  59                 99

Deferred income tax assets            145                151

Assets held for sale                  10                 81

Total current assets                  3,155              3,100

Property, plant and equipment, net    2,989              2,689

Goodwill                              611                611

Intangible assets, net                668                678

Investment in and advances to         659                683
non–consolidated affiliates

Fair value of derivative instruments, 4                  2
net of current portion

Deferred income tax assets            91                 74

Other long–term assets

— third parties                 176                168

— related parties               14                 16

Total assets                          $ 8,367            $ 8,021

LIABILITIES AND EQUITY

Current liabilities

Current portion of long–term    $ 28               $ 23
debt

Short–term borrowings           421                18

Accounts payable

— third parties                 1,096              1,245

— related parties               45                 51

Fair value of derivative instruments  84                 95

Accrued expenses and other current    447                476
liabilities

Deferred income tax liabilities       30                 34

Liabilities held for sale             1                  57

Total current liabilities             2,152              1,999

Long–term debt, net of current  4,441              4,321
portion

Deferred income tax liabilities       546                581

Accrued postretirement benefits       666                687

Other long–term liabilities     274                310

Total liabilities                     8,079              7,898

Commitments and contingencies

Shareholder's equity

Common stock, no par value; unlimited
number of shares authorized; 1,000    —            —
shares issued and outstanding as of
December 31, 2012 and March 31, 2012

Additional paid–in capital      1,654              1,659

Accumulated deficit                   (1,236)            (1,379)

Accumulated other comprehensive loss  (160)              (191)

Total equity of our common            258                89
shareholder

Noncontrolling interests              30                 34

Total equity                          288                123

Total liabilities and equity          $ 8,367            $ 8,021

Novelis Inc.  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)(In 
millions)
                                         Nine Months Ended December 31,
                                         2012    2011

OPERATING ACTIVITIES

Net income                               $ 144   $ 196

Adjustments to determine net cash
provided by operating activities:

Depreciation and amortization            218     249

(Gain) loss on unrealized derivatives
and other realized derivatives in        11      (67)
investing activities, net

Gain on assets held for sale             (3)     —

Deferred income taxes                    3       11

Write–off and amortization of fair 18      20
value adjustments, net

Equity in net loss of                    15      9
non–consolidated affiliates

(Gain) loss on foreign exchange          (5)     16
remeasurement of debt

Loss on sale of assets                   1       1

Non-cash impairment charges              3       14

Amortization of debt issuance costs      13      12

Other, net                               (5)     (9)

Changes in assets and liabilities
including assets and liabilities held
for sale (net of effects from
acquisitions and divestitures):

Accounts receivable                      78      152

Inventories                              (193)   193

Accounts payable                         (139)   (426)

Other current assets                     (23)    (16)

Other current liabilities                (83)    (123)

Other noncurrent assets                  (18)    14

Other noncurrent liabilities             (13)    (41)

Net cash provided by operating           22      205
activities

INVESTING ACTIVITIES

Capital expenditures                     (538)   (297)

Proceeds from sales of assets, third     18      11
party

Proceeds from sale of assets, related    2       —
party

Proceeds from investment in and advances
to non–consolidated affiliates,    1       1
net

Proceeds (outflow) from related party    2       (5)
loans receivable, net

Proceeds from settlement of other        10      95
undesignated derivative instruments, net

Net cash used in investing activities    (505)   (195)

FINANCING ACTIVITIES

Proceeds from issuance of debt           296     274

Principal payments                       (93)    (16)

Short–term borrowings, net         304     211

Dividends, noncontrolling interest       (2)     (1)

Acquisition of noncontrolling interest   (9)     (343)
in Novelis Korea Ltd

Debt issuance costs                      (3)     (2)

Net cash provided by financing           493     123
activities

Net increase in cash and cash            10      133
equivalents

Effect of exchange rate changes on cash  13      (8)

Cash and cash equivalents —        317     311
beginning of period

Cash and cash equivalents — end of $ 340   $ 436
period

Reconciliation from Net Income Attributable to our Common Shareholder to 
Adjusted EBITDA

Novelis is providing disclosure of the reconciliation of reported non-GAAP 
financial measures to their comparable financial measures on a GAAP basis.
                               Three Months Ended  Nine Months Ended

(in millions)                  December 31,        December 31,
                               2012      2011      2012    2011

Net income attributable to our $ 3       $ (12)    $ 143   $ 170
common shareholder

Noncontrolling interests       —   (1)       (1)     (26)

Income tax (provision) benefit (11)      10        (69)    (42)

Interest, net                  (74)      (71)      (219)   (217)

Depreciation and amortization  (76)      (79)      (218)   (249)

EBITDA                         164       129       650     704



Unrealized gain (loss) on      4         (63)      (7)     (38)
derivatives

Realized gain (loss) on
derivative instruments not     —   (3)       2       (1)
included in segment
income

Proportional consolidation     (11)      (9)       (31)    (34)

Gain on assets held for sale   —   —   3       —

Restructuring charges, net     (5)       (1)       (26)    (31)

Other income, net              (9)       (8)       (12)    (12)

Adjusted EBITDA                $ 185     $ 213     $ 721   $ 820

The following table shows the negative "Free cash flow" for the nine months 
ended December 31, 2012 and 2011 and the ending balances of cash and cash 
equivalents (in millions).
                                      Nine Months Ended December 31,
                                      2012      2011

Net cash provided by operating        $ 22      $ 205
activities

Net cash used in investing activities (505)     (195)

Less: Proceeds from sales of assets   (20)      (11)

Free cash flow                        $ (503)   $ (1)

Ending cash and cash equivalents      $ 340     $ 436

The following table shows Net income (loss) attributable to our common 
shareholder excluding Certain Items for the three months ended December 31, 
2012 and 2011 (in millions).
                                     Three Months Ended December 31,
                                     2012  2011



Net income (loss)                    $ 3   $ (12)

Certain Items:

Restructuring charges                5     1

Tax effect on Certain Items          0     0

Net income (loss), excluding Certain $ 8   $ (11)
Items

Media Contact: Charles Belbin, +1-404-760-4120, charles.belbin@novelis.com, 
Fiona Bell, +1-404-760-6585, fiona.bell@novelis.com, or Investor Contact: 
Isabel Janci, +1-404-760-4164, isabel.janci@novelis.com

http://www.novelis.com

SOURCE: Novelis Inc.

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CO: Novelis Inc.
ST: Georgia
NI: MNG ERN CONF 

-0- Feb/12/2013 12:07 GMT


 
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