Novelis Incorporated, a US-based sustainable aluminum solutions leader and a subsidiary of Hindalco Industries, has announced plans to raise $750 million through the issuance of bonds. The proceeds will primarily be utilized to repay $738 million of outstanding debt, with the remainder bolstering the company’s cash reserves. This bond offering has been upsized by $250 million from its initial announcement, reflecting strong investor interest. Despite an 18% drop in net income to $128 million in Q2 FY25, the company reported a 4.5% growth in net sales to $4.3 billion, driven by higher aluminum prices and record beverage packaging shipments.

Novelis to Issue $750 Million in Bonds

Expanded Offering Size
Novelis Inc announced that its indirect wholly-owned subsidiary, Novelis Corporation, has priced $750 million in senior notes at an interest rate of 6.875%, maturing in January 2030. This marks a $250 million increase from the initial offering size, demonstrating robust market demand.

Strategic Use of Proceeds
The proceeds will be used to repay $738 million of outstanding debt, reducing financial liabilities and strengthening the company’s fiscal position. Any remaining funds will be added to the company's balance sheet to enhance liquidity.

Financial Performance: Net Income Declines Despite Sales Growth

18% Drop in Net Income
In the second quarter of fiscal year 2025, Novelis reported a net income of $128 million, an 18% decline compared to $157 million in the same quarter of the previous year. The reduction is attributed to increased operational expenses and fluctuating market conditions.

Net Sales Surge 4.5%
Despite the decline in income, Novelis achieved a 4.5% increase in net sales, reaching $4.3 billion in Q2 FY25, up from $4.1 billion in the prior year. This growth was fueled by higher average aluminum prices and a 1% rise in total flat-rolled product shipments to 945 kilotonnes.

Operational Resilience Amid Market Challenges

Record Beverage Packaging Shipments
Novelis leveraged its global operations to deliver record beverage packaging shipments, mitigating the impact of a flooding-related outage at its Sierre facility. This achievement underscores the company’s operational flexibility and market responsiveness.

Leadership Commentary
Steve Fisher, President and CEO of Novelis, highlighted the company’s ability to navigate challenging market dynamics while prioritizing customer satisfaction and growth. Executive Vice President and CFO, Devinder Ahuja, emphasized the company’s focus on balance sheet management and ongoing growth investments.

Looking Ahead: Strategic Priorities

Focus on Debt Reduction
The $750 million bond issuance aligns with Novelis’s broader strategy to optimize its debt structure, ensuring long-term financial sustainability.

Investments in Growth
The company remains committed to its growth initiatives, despite short-term challenges, aiming to strengthen its market position in aluminum rolled products and sustainable packaging solutions.