US-based Novelis, a wholly-owned subsidiary of Hindalco Industries, on Friday posted a 39 per cent decline in net income at USD 63 million for the quarter ended March 31, 2020.
The company, which deals in aluminium rolled products, had posted a net income of USD 103 million in the year-ago period, Hindalco said in a filing to BSE.
"Novelis Inc...reported net income attributable to its common shareholder of $63 million for the fourth quarter of fiscal year 2020, down 39 percent from the fourth quarter of fiscal 2019," it said.
The decrease is mainly due to a loss on extinguishment of debt related to the refinancing of senior notes in the fourth quarter of FY20, it said.
Novelis Inc is experiencing increasing disruption to its global aluminum production and supply chain, including the shutdown of some of its plants, as a result of government decrees and some customers temporarily shutting down their own manufacturing operations in response to the COVID-19 pandemic, the filing said.
The extent to which the pandemic impacts its business, results of operations and financial condition will be dependent on future developments which are highly uncertain and cannot be predicted, it added.
While the company currently anticipates that lower demand will continue to negatively impact sales in the near-term, particularly in the automotive segment, Novelis has several strategic advantages that provide confidence in its ability to maintain business continuity for the long term due to its strong balance sheet, diverse product mix and global operating footprint, it said.
"As we all are navigating this dynamic environment, we will continue to work closely with all relevant parties to address challenges as they arise, and will continue making decisions that are in the best interest of our employees, our customers and our communities," it said.
The company's net sales decreased 12 per cent from the prior year period to USD 2.7 billion for the fourth quarter of FY20, driven by lower average LME aluminum prices and local market premiums, and a 7 per cent decline in shipments.
The decline in flat rolled product shipments to 811 kilotonnes was against a very strong prior year record level, and partially due to the initial impacts from COVID-19 related disruptions in March.
"Our strategy to invest in our operations and our people has delivered four consecutive years of record financial results and an exceptionally strong balance sheet.
"It is this solid foundation, coupled with an unwavering commitment to our purpose of shaping a sustainable world together, that will help us safely and successfully navigate the challenges posed by the novel coronavirus and extend our leadership position in the aluminium industry," Novelis Inc President and CEO said Steve Fisher said.
"In addition, with the acquisition of Aleris now complete, I am more confident than ever that our diverse product portfolio, global footprint, deep customer relationships, reliable assets, and disciplined investments will deliver even more value to our customers and shareholder moving forward," Fisher added.
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