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Novelis profits from higher recycled content

Increased recycling content in its products has contributed to a surge in profits for Novelis, the aluminium giant has said in its latest quarterly report.

The company, which has operations in the Americas, Europe and Asia, said its products now include 50% recycled material. The high recycled content range has also been expanded.

Using more recycled metal has allowed Novelis to reduce costs, and this was one of the drivers of a 16% year-on-year increase in earnings before interest, tax, depreciation and amortisation (ebitda) to $236m (£155m) between September and December 2014.

Phil Martens, president and chief executive, said: “By shifting our portfolio to more premium products in high-growth markets and advancing our recycling operations, we set record can and automotive shipments, generated significantly higher earnings, and achieved our mid-decade goal of having 50% recycled content in our products.”

If the nine months to December are considered, the company’s pretax profits doubled year-on-year to $144m. Sales in the period increased by 16% to $8.4bn.

Martens said he expected earnings to grow further in the last three months of the financial year as the company reached full production at its automotive operations in partnership with car-marker Ford and ramp-up new recycling facilities in Germany and Brazil.

“However, this growth will be tempered by negative currency headwinds in Europe, challenging pricing dynamics in Asia, and reduced production related to the Logan hot mill outage in North America last month,” he added.

“In spite of these market challenges, we still expect ebitda for the second half of fiscal 2015 tol be higher than in the first half of the year.”

Novelis posted ebitda of $230m in the six months to September 2014.

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