Novelis Inc., a wholly owned subsidiary of Hindalco Industries, reported its Q3FY26 results, showing resilience despite significant operational challenges from two fires at its Oswego, NY plant. Net sales increased 3% YoY to $4.2 billion. Adjusted EBITDA stood at $348 million, down 5% YoY, heavily impacted by the Oswego incidents and tariffs. The company remains on track with strategic investments, including the Bay Minette facility.
Novelis Reports Q3 Fiscal Year 2026 Financial Performance
Novelis Inc. announced its results for the third quarter of fiscal year 2026. Despite facing significant short-term capacity constraints due to production disruption at its Oswego, NY plant following two fires, the underlying business performance remained strong. Net sales for the quarter increased 3% YoY to $4.2 billion, primarily driven by higher aluminum prices. However, rolled product shipments declined 11% YoY to 809 kilotonnes (kt).
Adjusted EBITDA for Q3FY26 was $348 million, marking a 5% decrease YoY. This figure absorbed an estimated negative impact of $54 million from the Oswego production interruptions and $34 million from tariffs. Conversely, Adjusted EBITDA per tonne improved 6% YoY to $430, showcasing effective cost management and recycling benefits. Excluding the negative impacts of the fires and tariffs, Adjusted EBITDA per tonne would have been $495.
The quarter resulted in a net loss attributable to common shareholders of $160 million, compared to a net income of $110 million in the prior year. This loss includes pre-tax Oswego fire impacts of $54 million in Adjusted EBITDA and total pre-tax net losses of $327 million related to the fires, net of recoveries.
Oswego Production Disruption Update
The Oswego plant experienced two significant fires on September 16 and November 20, 2025, contained to the hot mill area. The company is intensely focused on restoration, with an estimated timeline to restart the hot mill in late Q2 calendar year 2026. The estimated total free cash flow impact before insurance is ~$1.3–$1.6 billion, with an estimated Adjusted EBITDA impact of ~$150–$200 million. Novelis anticipates recovering approximately 70–80% of this impact through insurance in future periods.
Cash Flow and Liquidity
For the first nine months of FY26, net cash used in operating activities was an outflow of $90 million, compared to an inflow of $263 million in the prior year, largely due to the Oswego fires. Adjusted free cash flow for the nine-month period was an outflow of $1.641 billion, negatively impacted by an estimated $485 million related to Oswego-related costs.
The company bolstered its financial standing by receiving an equity contribution of $750 million from its common shareholder in December 2025. As of December 31, 2025, total liquidity stood at $2.6 billion. The Net Leverage Ratio (Adjusted Net Debt/TTM Adjusted EBITDA) ended the quarter at 3.7x.
Strategic Progress and End Market Outlook
Cost Efficiency Initiative
The global cost efficiency program is delivering results, leading to an upwardly revised expected FY26 exit run-rate savings to over $150 million (up from the previous estimate of $125+ million). The company continues to target over $300 million in total savings by the end of FY28.
Bay Minette Greenfield Project
Construction is progressing on the Bay Minette, Alabama (US) greenfield rolling and recycling facility, with an estimated total capital cost around $5 billion. The cold mill commissioning is expected to start in March 2026, with the full plant commissioning firmly on track for the second half of calendar year 2026.
Market Trends
Long-term growth remains positive, particularly in Beverage Packaging (60% of FY25 Shipments), projected at a FY2026-2031 CAGR of ~4%. Near-term, beverage packaging demand remains strong, though capacity constraints from Oswego are present. The Automotive segment (19% of FY25 Shipments) shows a favorable mix in North America (trucks, SUVs) but slower EV adoption ex-China.
Source: BSE
