Hindalco Industries-owned Novelis expects to achieve cumulative cost savings of $300 million from 2027-28 onwards through operational and footprint efficiencies, as well as selling, general and administrative (SG&A) initiatives. Two-thirds of the savings will come from operational efficiencies, with the remaining one-third from SG&A initiatives. Novelis also expects its adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) to rise to over $600 per tonne in the long term, up from $406 per tonne in the December quarter.
The company plans to achieve these savings through strategies such as increasing labor productivity, optimizing energy and variable costs, reducing procurement costs, and enhancing the effectiveness of its assets. Novelis will also focus on optimizing its footprint by fully utilizing its automotive finishing line in China and closing two specialty finishing plants in North America.
In addition, Novelis has committed to keeping its net leverage ratio at or around 3.5x during its strategic capital investment cycle. The company’s net debt to EBITDA ratio stood at 2.9x at the end of the December quarter. Novelis is also investing $4.1 billion in its Bay Minette project in the US, which is expected to be commissioned in the second half of 2026.
The company expects demand for flat rolled products to grow at a compound annual rate of 4% between 2024 and 2029, driven by robust growth in end markets such as beverage packaging, automotive, specialty, and aerospace. Novelis’s rolled product shipments were around 2.8 million tonnes between April and December 2024, and the company expects its global flat rolled products capacity to reach around 5 million tonnes with the addition of 600 kilotnes from Bay Minette and 175,000 tonnes from debottlenecking.