Hindalco Industries : Q3 - FY23 Results Of Novelis Inc And Investor Presentation

BSE Limited Scrip Code: 500440

National Stock Exchange of India

Limited

Scrip Code: HINDALCO

February 6, 2023

Banque Internationale A Luxembourg Societe Anonyme

Sub: Q3 - FY23 Results of Novelis Inc.

Re: Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations)

ISIN: INE038A01020

Dear Sir,

Kindly note that Novelis Inc., a Wholly owned subsidiary of the Company has declared its financial results for the quarter ended December 31, 2022. A copy of the Press release and Investor Presentation issued in this regard is enclosed herewith.

The above is for your information and record.

Thanking you,

For Hindalco Industries Limited

Geetika Digitally signed by Geetika Anand

Anand Date: 2023.02.06 17:14:48 +05'30'

Geetika Anand

Company Secretary & Compliance Officer

Encl: a/a

Hindalco Industries Limited

6th & 7th Floor, Birla Centurion, Pandurang Budhkar Marg, Worli, Mumbai - 400030, India

T:[phone]/62610555 | F:[phone]/62610500 | W: www.hindalco.com

Registered Office : Ahura Centre, 1st Floor, B wing, Mahakali Caves Road, Andheri (East), Mumbai -

400093, India

Corporate ID No: L27020MH1958PLC011238

News Release

Novelis Reports Third Quarter Fiscal Year 2023 Results

Q3 Fiscal Year 2023 Highlights

• Net income attributable to our common shareholder was $12 million, down 95% YoY
• Net income from continuing operations excluding special items was $96 million, down 60% YoY
• Adjusted EBITDA of $341 million, down 33% YoY in a challenging cost environment
• Shipments of 908 kilotonnes, down 2% YoY
• Resilient balance sheet with Net Leverage ratio of 2.6x and Total Liquidity $2.1 billion

ATLANTA, February 6, 2023 - Novelis Inc., a leading sustainable aluminum solutions provider and the world leader in aluminum rolling and recycling, today reported results for the third quarter of fiscal year 2023. Net income attributable to its common shareholder decreased 95% versus the prior year to $12 million, due mainly to factors driving lower Adjusted EBITDA as outlined below and unfavorable metal price lag from falling aluminum local market premiums in the current year. Excluding special items in both years, third quarter fiscal year 2023 net income from continuing operations decreased 60% versus the prior year to $96 million due primarily to lower Adjusted EBITDA.

"As expected, our results were pressured by continued unprecedented inflationary headwinds, but were also further impacted by lower shipments resulting from significantly larger than anticipated customer inventory reduction actions in the beverage packaging market," said Steve Fisher, President and CEO, Novelis Inc. "We will continue to address these short-term challenges while remaining focused on building for our future in a prudent manner. Importantly, we believe the underlying demand fundamentals driven by increasing consumer preferences for lightweight, sustainable aluminum solutions in all our key end markets remains unchanged."

Net sales decreased 3% to $4.2 billion for the third quarter of fiscal year 2023, compared to $4.3 billion in the prior year period, primarily driven by lower average aluminum prices and a 2% decrease in total flat rolled product shipments to 908 kilotonnes, partially offset by increased product pricing and favorable product mix. The decrease in shipments is mainly due to lower beverage can shipments as customers reduce their inventory and adjust to more normalized levels of can demand post-pandemic, and softer demand for specialties products in this weaker macroeconomic environment. Conversely, easing supply chain constraints, including higher semiconductor availability, resulted in higher automotive shipments compared to the prior year.

Adjusted EBITDA decreased 33% to $341 million in the third quarter of fiscal year 2023, compared to $506 million in the prior year period, driven by an extraordinary inflationary environment and higher energy costs due to geopolitical instability. Results were also impacted by less favorable metal benefits from recycling, unfavorable foreign exchange, and lower volume. These headwinds were partially offset by higher product pricing, including some higher cost pass- through to customers, and favorable product mix.

Adjusted free cash flow from continuing operations was an outflow of $158 million for the first nine months of fiscal year 2023, compared to a generation of $217 million in the prior year period. The decrease is due primarily to unfavorable metal price lag in the current year compared to a favorable lag in the prior year, lower Adjusted EBITDA, and higher capital expenditures. The company had a net leverage ratio (Net Debt / TTM Adjusted EBITDA) of 2.6x at the end of the third quarter of fiscal year 2023, compared to 2.3x in the prior year period.

"We are navigating a challenging period of intensified inflationary headwinds, and continuing to implement cost control measures and work with our customers to share these extraordinary inflation impacts," said Dev Ahuja, Executive Vice President and CFO, Novelis Inc. "We see some of these inflated costs gradually settling down, however, we are applying a disciplined approach to capital expenditures and working capital that will allow us to maintain a strong balance sheet through these near-term headwinds while strategically investing in projects to drive future growth."

The company had a strong Total Liquidity position of $2.1 billion as of December 31, 2022.

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Third Quarter Fiscal Year 2023 Earnings Conference Call

Novelis will discuss its third quarter fiscal year 2023 results via a live webcast and conference call for investors at 7:00 a.m. EST on Monday, February 6, 2023. To view slides and listen to the live webcast, visit https:// events.q4inc.com/attendee/164164035. To join by telephone, dial toll-free in North America at 888-350-2056, the India toll line +91.22.5032.3379, or the international toll line at 1-646-960-0051. The webcast link, presentation materials and access information can also be found at https://investors.novelis.com/.

About Novelis

Novelis Inc. is driven by its purpose of shaping a sustainable world together. We are a global leader in the production of innovative aluminum products and solutions and the world's largest 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 beliefs that the underlying demand fundamentals driven by increasing consumer preferences for lightweight, sustainable aluminum solutions in all our key end markets remains unchanged and that inflated costs will gradually settle down. 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 factors are discussed under the captions "Risk Factors" and "Management's Discussion and Analysis" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 and as the same may be updated from time to time in our quarterly reports on Form 10-Q, or in other reports which we from time to time file with the SEC.

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)

		Three Months Ended			Nine Months Ended
		December 31,			December 31,
(in millions)		2022			2021			2022			2021
Net sales	$	4,201	$	4,326	$	14,089	$	12,300
Cost of goods sold (exclusive of depreciation and amortization)		3,794			3,613			12,199			10,150
Selling, general and administrative expenses		164			156			509			457
Depreciation and amortization		133			137			405			405
Interest expense and amortization of debt issuance costs		75			54			198			173
Research and development expenses		23			23			69			68
Loss on extinguishment of debt, net		-			1			-			63
Restructuring and impairment expenses, net		5			3			7			1
Equity in net income of non-consolidated affiliates		(6)			(7)			(14)			(8)
Other expenses (income), net		7			(2)			67			(86)
		4,195			3,978			13,440			11,223
Income from continuing operations before income tax provision		6			348			649			1,077
Income tax (benefit) provision		(6)			89			146			276
Net income from continuing operations		12			259			503			801
Income (loss) from discontinued operations, net of tax		-			3			(2)			(62)
Net income (loss) from discontinued operations		-			3			(2)			(62)
Net income		12			262			501			739
Net loss attributable to noncontrolling interest		-			-			(1)			-
Net income attributable to our common shareholder	$	12	$	262	$	502	$	739

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