Novelis Inc., a subsidiary of Hindalco Industries, reported its third quarter fiscal year 2026 results, marked by significant operational challenges following two fires at its Oswego, NY plant. Despite this, underlying business performance remained strong, with Adjusted EBITDA per tonne rising 6% YoY to $430. Net sales grew 3% YoY to $4.2 billion, while net loss attributable to the common shareholder reached $160 million due to fire-related pre-tax losses totaling $327 million.
Quarterly Performance Overview
Novelis announced its results for the third quarter of fiscal year 2026 (ending December 31, 2025). The period was heavily impacted by production interruptions at the Oswego facility following fires on September 16 and November 20, 2025. These interruptions resulted in an estimated 72 kilotonnes (kt) reduction in rolled product shipments.
Key Financial Highlights (Q3 FY26 vs Q3 FY25)
- Net Sales increased 3% YoY to $4.2 billion.
- Rolled Product Shipments (FRP) decreased 11% YoY to 809 kt.
- Adjusted EBITDA was $348 million, down 5% YoY. This result absorbed an estimated negative impact of $54 million from the Oswego fires and $34 million from tariffs.
- Adjusted EBITDA per tonne increased 6% YoY to $430. Excluding the impact of tariffs and Oswego fires, Adjusted EBITDA per tonne was $495.
- Net loss attributable to the common shareholder was $160 million, compared to a net income of $110 million in the prior year. This loss includes $327 million in pre-tax losses related to the Oswego fires.
Impact of Oswego Production Disruption
Novelis confirmed that both fire incidents were contained to the hot mill area, leaving other critical assets operational. The company estimates the total free cash flow impact before insurance to be ~$1.3-1.6 billion, including an Adjusted EBITDA impact of ~$150-200 million and a shipment reduction of ~150-200 kt. The estimated timeline to restart the Oswego hot mill is the late second quarter of calendar 2026. The company anticipates that approximately 70-80% of the cash flow and Adjusted EBITDA impact will be recoverable 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 the previous year, largely due to the Oswego fires. Adjusted Free Cash Flow for the nine months was an outflow of ($1,641 million), impacted by an estimated negative $485 million related to the Oswego event. To bolster its position, Novelis received an equity contribution from its shareholder of $750 million in December 2025, bringing total liquidity to $2.6 billion at the end of the quarter. The Net Leverage Ratio stood at 3.7x.
Structural Cost Reduction and Strategic Updates
The global cost efficiency program is showing positive results, leading the company to raise its expected FY26 exit run-rate savings to over $150 million. The company continues to target over $300 million in total savings by the end of FY28. Furthermore, the greenfield rolling and recycling facility in Bay Minette, Alabama, is progressing well. The cold mill commissioning is expected to start in March 2026, putting the plant firmly on track for full commissioning in the second half of calendar year 2026.
Near-Term Market Demand
Demand remains resilient, especially in the beverage packaging sector, which saw strong global demand. However, automotive shipments were constrained due to the Oswego outage. Long-term CAGR estimates for beverage packaging remain strong at ~4% (excluding China) through FY2031.
Source: BSE
