Hindalco Industries : Novelis Reports Second Quarter Fiscal Year 2023 Results

News Release

Novelis Reports Second Quarter Fiscal Year 2023 Results

Q2 Fiscal Year 2023 Highlights

• Net income attributable to our common shareholder decreased 23% YoY to $183 million
• Net income from continuing operations of $184 million, down 23% YoY; net income from continuing operations excluding special items was $203 million, down 17% YoY
• Adjusted EBITDA of $506 million, down 8% YoY; Adjusted EBITDA per tonne $514
• Shipments of 984 kilotonnes, up 2% YoY
• Net Leverage ratio of 2.3x and Total Liquidity $2.8 billion both demonstrate balance sheet strength in uncertain macro-economic environment
• Broke ground on new US recycling and rolling plant in Bay Minette, Alabama

ATLANTA, November 8, 2022 - Novelis Inc., a leading global provider of sustainable aluminum solutions and the world leader in aluminum rolling and recycling, today reported results for the second quarter of fiscal year 2023. Net income attributable to its common shareholder decreased 23% versus the prior year to $183 million, while net income from continuing operations decreased 23% to $184 million. Excluding special items in both years, second quarter fiscal year 2023 net income from continuing operations decreased 17% versus the prior year to $203 million due primarily to lower Adjusted EBITDA.

"We delivered a solid second quarter despite challenging headwinds from inflation, the stronger US dollar, and reduced metal benefits, with good operational performance that allowed us to capture robust end market demand in the quarter and increase total shipments," said Steve Fisher, President and CEO, Novelis Inc. "Although the current macro-economic environment is uncertain, we believe long-term demand for sustainable, lightweight, infinitely recyclable aluminum remains intact. We continue to progress our transformational investment strategy to grow with our customers, reaching an exciting milestone in the US with the ground-breaking of our new recycling and rolling plant in Alabama last month."

Net sales increased 17% to $4.8 billion for the second quarter of fiscal year 2023, compared to $4.1 billion in the prior year period, primarily driven by a 2% increase in total flat rolled product shipments to 984 kilotonnes, increased product pricing, favorable mix and higher average aluminum prices. Shipment growth is mainly due to higher automotive shipments as semiconductor shortages impacting the automotive industry began to ease, as well as slightly higher beverage can and aerospace shipments, partially offset by lower specialty shipments.

Adjusted EBITDA decreased 8% to $506 million in the second quarter of fiscal year 2023, compared to $553 million in the prior year period, primarily due to higher energy and other operating costs driven by geopolitical instability, inflation, and global supply chain disruptions, as well as unfavorable foreign exchange translation. These headwinds were partially offset by higher product pricing, including some higher cost pass-through to customers, higher volume, and favorable product mix.

Adjusted free cash flow from continuing operations was an outflow of $90 million for the first six months of fiscal year 2023, compared to a generation of $158 million in the prior year period. The decrease is due primarily to negative metal price lag in the current year compared to a positive lag in the prior year resulting from volatile aluminum prices, lower Adjusted EBITDA, and higher capital expenditures. The company had a net leverage ratio (Net Debt / TTM

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Adjusted EBITDA) of 2.3x at the end of the second quarter of fiscal year 2023, compared to 2.4x in the prior year period.

"While demand for aluminum rolled products broadly remains solid, we expect high energy costs and inflationary impacts to intensify in the near-term," said Devinder Ahuja, Executive Vice President and CFO, Novelis Inc. "We are actively working with our customers to share these extraordinary inflationary impacts, while also driving operational efficiencies and cost control measures to partially mitigate these macroeconomic headwinds. We also will continue our disciplined approach to maintaining a strong balance sheet, prioritizing and pacing capital spending for our strategic growth initiatives that we believe will allow us to grow over the long term."

The company had a strong Total Liquidity position of $2.8 billion as of September 30, 2022.

Second Quarter Fiscal Year 2023 Earnings Conference Call

Novelis will discuss its second quarter fiscal year 2023 results via a live webcast and conference call for investors at 7:00 a.m. EST on Tuesday, November 8, 2022. To join by telephone, dial toll-free in North America at 800-926-5171, India toll-free at 18002662119 or the international toll line at [phone]. The webcast link, presentation materials and access information can also be found at novelis.com/investors.

About Novelis

Novelis Inc. is driven by its purpose of shaping a sustainable world together. We are a critical partner providing innovative aluminum solutions to customers and the world's largest roller and recycler of aluminum. Our ambition is to be the leading provider of low-carbon, sustainable aluminum solutions and to achieve a fully circular economy by partnering with our suppliers, as well as our customers in the aerospace, automotive, beverage can, and specialties industries throughout North America, Europe, Asia, and South America. Novelis had net sales of $17.1 billion in fiscal year 2022. Novelis is a subsidiary of Hindalco Industries Limited, an industry leader in aluminum and copper, and the metals flagship company of the Aditya Birla Group, a multinational conglomerate based in Mumbai. For more information, visit novelis.com.

Non-GAAP Financial Measures

This news release and the presentation slides for the earnings call contain non-GAAP financial measures as defined by SEC rules. We believe 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, which can be found at novelis.com/investors. 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 of Adjusted EBITDA, Adjusted Free Cash Flow, Total Liquidity, Net Debt, income from continuing operations excluding special items, and segment information.

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Forward-Looking Statements

Statements made in this news release which describe Novelis' intentions, expectations, beliefs or predictions may be forward-looking 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. Examples of forward-looking statements in this news release are statements about our ability to drive long-term value for our stakeholders or grow alongside our customers. Novelis cautions that, by their nature, forward-looking statements involve risk and uncertainty and 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; inflationary pressures impacting the price of energy, labor, freight, coatings and alloys, such as magnesium; the capacity and effectiveness of our hedging activities; inflationary pressures affecting end market demand for our aluminum products in the building and construction market; 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 including in connection with potential acquisitions and investments; continued risks stemming from the acquisition of Aleris Corporation, including uncertainties inherent in the acquisition method of accounting; disruption to our global aluminum production and supply chain as a result of COVID-19, rising interest rates or geopolitical factors, such as Russia's war in Ukraine; changes in the relative values of various currencies and the effectiveness of our currency hedging activities; decreases in demand for our aluminum products due to macroeconomic headwinds due in part to rising interest rates and geopolitical factors, such as Russia's war in Ukraine; risks related to sanctions, tariffs, a ban or similar actions impacting the supply of Russian aluminum and the global aluminum supply; factors affecting our operations, such as litigation, environmental remediation and clean-up costs, breakdown of equipment and other events; economic, regulatory and political factors within the countries in which we operate or sell our products, including changes in duties or tariffs; risks related to cybersecurity and data breaches; our potential inability to protect our intellectual property and the confidentiality of our know-how, trade secrets, technology, and other proprietary information; competition from other aluminum rolled products producers as well as from substitute materials such as steel, glass, plastic and composite materials; downturns in consumer demand for our products or changes in consumer preferences as it relates to our products; the impact of the global semiconductor shortage on automotive production and demand for automotive aluminum sheet; changes in general economic conditions including deterioration in the global economy; the risks of pandemics or other public health emergencies, including the continued spread and impact of, and the governmental and third party response to, the COVID-19 pandemic; the impact of climate change or the legal, regulatory, or market response to climate change; changes in government regulations, particularly those affecting taxes, derivative instruments, and environmental, health or safety compliance; risks that production levels and margins of our recent capital expenditures do not grow in line with our current expectations and that we may not realize returns commensurate with our investments; changes in interest rates that have the effect of increasing the amounts we pay under our credit facilities and other financing agreements; and our ability to generate cash. The above list of factors is not exhaustive. Other important risk factors are included under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.

Media Contact:	Investor Contact:
Julie Groover	Megan Cochard
[phone]	[phone]
[e-mail]	[e-mail]

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Novelis Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in millions)

Net sales

Cost of goods sold (exclusive of depreciation and amortization) Selling, general and administrative expenses

Depreciation and amortization

Interest expense and amortization of debt issuance costs Research and development expenses

Loss on extinguishment of debt, net

Restructuring and impairment expenses (reversals), net Equity in net income of non-consolidated affiliates Other expenses (income), net

Income from continuing operations before income tax provision Income tax provision

Net income from continuing operations

Loss from discontinued operations, net of tax

Net loss from discontinued operations

Net income

Net loss attributable to noncontrolling interest

Net income attributable to our common shareholder

Three Months Ended		Six Months Ended
September 30,		September 30,

	2022		2021		2022		2021
$	4,799	$	4,119	$	9,888	$	7,974
	4,140		3,400		8,405		6,537
	181		142		345		301
	134		134		272		268
	65		60		123		119
	23		21		46		45
	-		64		-		62
	1		-		2		(2)
	(4)		-		(8)		(1)
	10		(20)		60		(84)
$	4,550	$	3,801	$	9,245	$	7,245
	249		318		643		729
	65		79		152		187
$	184	$	239	$	491	$	542
	(1)		(2)		(2)		(65)
	(1)		(2)		(2)		(65)
$	183	$	237	$	489	$	477
	-		-		(1)		-
$	183	$	237	$	490	$	477

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Novelis Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	(in millions, except number of shares)		September			March 31,
		30,			2022
	ASSETS
	Current assets:
	Cash and cash equivalents	$	1,145		$	1,070
	Accounts receivable, net
	- third parties (net of allowance for uncollectible accounts of $6 as of September 30, 2022,			2,239			2,590
	and March 31, 2022)
	- related parties		200			222
	Inventories		3,333			3,038
	Prepaid expenses and other current assets		161			195
	Fair value of derivative instruments		536			377
	Assets held for sale		5			5
	Current assets of discontinued operations		6			6
	Total current assets		7,625			7,503
	Property, plant and equipment, net		4,425			4,624
	Goodwill		1,070			1,081
	Intangible assets, net		590			623
	Investment in and advances to non-consolidated affiliates		744			832
	Deferred income tax assets		145			158
	Other long-term assets
	- third parties		295			274
	- related parties		2			1
	Total assets	$	14,896		$	15,096
	LIABILITIES AND SHAREHOLDER'S EQUITY
	Current liabilities:
	Current portion of long-term debt	$	63		$	26
	Short-term borrowings		858			529
	Accounts payable
	- third parties		3,242			3,869
	- related parties		308			320
	Fair value of derivative instruments		310			959
	Accrued expenses and other current liabilities		816			774
	Current liabilities of discontinued operations		17			21
	Total current liabilities		5,614			6,498
	Long-term debt, net of current portion		4,850			4,967
	Deferred income tax liabilities		353			158
	Accrued postretirement benefits		609			669
	Other long-term liabilities		320			295
	Total liabilities		11,746			12,587
	Commitments and contingencies
	Shareholder's equity
	Common stock, no par value; unlimited number of shares authorized; 1,000 shares issued and			-			-
	outstanding as of September 30, 2022, and March 31, 2022
	Additional paid-in capital		1,208			1,308
	Retained earnings		2,304			1,814
	Accumulated other comprehensive loss		(368)			(620)
	Total equity of our common shareholder		3,144			2,502
	Noncontrolling interest		6			7
	Total equity		3,150			2,509
	Total liabilities and equity	$	14,896		$	15,096

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