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| EX-99.1 - EX-99.1 - Novelis Inc. | d356219dex991.htm |
| 8-K - 8-K - Novelis Inc. | d356219d8k.htm |
 Novelis Fourth Quarter & FY 2012
Earnings Conference Call
Philip Martens
President and Chief Executive Officer
Steve Fisher
Senior Vice President and Chief Financial Officer
Brighter Ideas with Aluminum
May 24, 2012
Exhibit 99.2 |
 2
Safe Harbor Statement
Forward-Looking Statements Statements made in
this presentation which describe Novelis' intentions, expectations, beliefs or predictions may be forward-looking statements
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
presentation are statements about future global growth in flat rolled products, our anticipated
capital expenditures in fiscal year 2013, and our expectations for demand recovery in fiscal
year 2013. Novelis cautions that, by their nature, forward-looking statements involve risk and
uncertainty and that 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; the
capacity and effectiveness of our metal hedging activities; 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 for future capital requirements; changes in the relative values of various currencies
and the effectiveness of our currency hedging activities; factors affecting our operations, such
as litigation, environmental remediation and clean-up costs, labor relations and negotiations,
breakdown of equipment and other events; the impact of restructuring efforts in the future; economic,
regulatory and political factors within the countries in which we operate or sell our products,
including changes in duties or tariffs; competition from other aluminum rolled products
producers as well as from substitute materials such as steel, glass, plastic and composite materials;
changes in general economic conditions including deterioration in the global economy,
particularly sectors in which our customers operate; changes in the fair value of derivative
instruments; cyclical demand and pricing within the principal markets for our products as well as
seasonality in certain of our customers’ industries; changes in government regulations,
particularly those affecting taxes, environmental, health or safety compliance; changes in interest rates that
have the effect of increasing the amounts we pay under our principal credit agreement and other
financing agreements; the effect of taxes and changes in tax rates; and our indebtedness and
our ability to generate cash. The above list of factors is not exhaustive. Other important risk
factors included under the caption "Risk Factors" in our Annual Report on Form 10-K for
the fiscal year ended March 31, 2012 are specifically incorporated by reference into this
presentation.
Non-GAAP Financial Measures
This presentation contains non-GAAP financial measures as defined by SEC rules. We think
that 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. We have included
reconciliations of each of these measures to the most directly comparable GAAP measure. In
addition, a more detailed description of these non- GAAP financial measures used in this
presentation, together with a discussion of the usefulness and purpose of such measures, is included as
Exhibit 99.2 to our Current Report on Form 8-K furnished to the SEC with our earnings press
release. |
 NOVELIS’
STRATEGY
SUMMARY & OUTLOOK
FY 2012 HIGHLIGHTS
Agenda
DETAILED FINANCIAL PERFORMANCE
3 |
 4
4 |
 5
Fiscal 2012 Highlights
Record EBITDA/tonne of $371 despite 4% decrease in
Shipments
Generated Record Free Cash Flow before CapEx
Strategic Expansions Progressing Well
Continued Executing on our Strategy
Strong Performance & Execution Throughout FY2012
5 |
 6
6 |
 7
Novelis’
Strategy
•
Product Portfolio/Footprint Optimization
•
One Novelis
•
Major Rolling Expansions in South America, Asia & North
America
•
Major Recycling Expansions Worldwide
CONTINUE TO STRENGTHEN THE BUSINESS
CAPTURE GROWTH IN OUR GLOBAL FRP MARKETS
80% RECYCLED CONTENT IN OUR PRODUCTS BY 2020
7 |
 Executing on Novelis’
Strategy –
FY12 Actions
•
Announced Divestiture of Three Foil Mills in Europe
•
Announced Closure of Saguenay Plant in Canada
•
Buyout
of
Minority
Interests
in
Korean Operations
•
Announced Intent to Exit the Evermore Joint Venture
CONTINUE TO STRENGTHEN THE BUSINESS
8 |
 Executing on Novelis’
Strategy –
FY12 Actions
•
Progressing
well
on
All
Major
Rolling
Expansions
--
Brazil,
South Korea & United States
•
Announced Entry Point into China through a new Plant geared
at Automotive Sheet Finishing Capabilities in Changzhou City in
the Jiangsu Province of China
CONTINUE TO STRENGTHEN THE BUSINESS
CAPTURE GROWTH IN OUR GLOBAL FRP MARKETS
9 |
 Executing on Novelis’
Strategy –
FY12 Actions
CONTINUE TO STRENGTHEN THE BUSINESS
CAPTURE GROWTH IN OUR GLOBAL FRP MARKETS
•
Commissioned Norf Recycling Facility
•
Planned Recycling Investments for Brazil, South Korea
and Europe
•
Increased Recycled Content in Products from 33% in
FY11 to 39% for FY12
80% RECYCLED CONTENT IN OUR PRODUCTS BY 2020
10 |
 11
Executing on Novelis’
Strategy –
FY12 Actions
•
Announced Divestiture of Three Foil Mills in Europe
•
Announced Closure of Saguenay Plant in Canada
•
Buyout of Minority Interests in Korean Operations
•
Announced Intent to Exit the Evermore Joint Venture
•
Progressing well on All Major Rolling Expansions
•
Announced Entry Point into China through a new Plant geared at
Automotive Sheet Finishing Capabilities in Changzhou City in the
Jiangsu Province of China
•
Commissioned Norf Recycling Facility
•
Planned Recycling Investments for Brazil, South Korea and Europe
•
Increased Recycled Content in Products from 33% in FY11 to 39% for
FY12
CONTINUE TO STRENGTHEN THE BUSINESS
CAPTURE GROWTH IN OUR GLOBAL FRP MARKETS
80% RECYCLED CONTENT IN OUR PRODUCTS BY 2020 |
 12
(Kt)
Strong FRP Growth Worldwide (2011-2016)
Strong Long-Term Outlook Supports Investments
Source:
February
2012
CRU,
Novelis
Estimates
~35% Growth Over 5 Years |
 Source:
February
2012
CRU,
Novelis
Estimates
(Kt)
Strong Long-Term Outlook Supports Investments
•
Asia Represents 67% of Growth
•
China Expected to Drive Majority
of this Growth
•
China will Grow at a 11% CAGR
Over the Next 5 Years
Strong FRP Growth Worldwide (2011-2016)
19,200
4,350
400
350
600
800
25,700
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
2011
Asia
M&NA
South
America
Europe
North
America
2016
13 |
 14
China’s First Plant for Aluminum Automotive Sheet
~$100 Million Plant Investment; ~120 kt Capacity
Commissioning at the End of 2014
Platform for Future Growth
NOVELIS TO BUILD ITS FIRST MANUFACTURING
PLANT IN CHINA
Novelis Enters China |
 15
Strengthening Unmatched Global Rolling Footprint
Brazil
Rolling Expansion
~220kt End of CY12
China
Auto Finishing Line
~120kt End of CY14
Korea
Rolling Expansion
~350kt End of CY13
United States
Auto Finishing Lines
~200kt Mid CY13
Global Rolling Strategic Investments
Shipments (Kt) |
 16
Global Recycling Investments
Brazil
Pinda
North
America
Italy
Pieve
Korea
Yeongju
Germany
Nachterstedt
Germany
Norf
Unmatched Global Recycling Footprint |
 17 |
 18
Fourth Quarter Financial Highlights
(Q4FY12 vs. Q4FY11)
Shipments Down 9% to 703 Kilotonnes
Net Sales Down 12% to $2.6 Billion
Adjusted EBITDA Down 17% to $233 Million
Free Cash Flow Before CapEx of $318 Million
Net Income, Excluding Special Items, of $25 Million
Net Loss of $107 Million
Demand Continuing to Improve Sequentially |
 Shipments & Sales
Total Company
Sales (Billions) •
Shipments (Kt)
Short-term Softness in Most Regions
Shipments
Sales
Q4FY12
Q4FY11
(18%)
(5%)
(9%)
(2%)
Shipments by Region
3.0
2.6
200
350
500
650
800
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
Q4FY11
Q4FY12
0
50
100
150
200
250
300
South
America
Asia
Europe
North
America
19 |
 20
(Millions)
Adjusted EBITDA Trend
Short-term Softness Impacting EBITDA
TTM EBITDA
Quarterly EBITDA
238
280
306
301
213
233
$800
$850
$900
$950
$1,000
$1,050
$1,100
$1,150
$0
$50
$100
$150
$200
$250
$300
$350
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q4FY12
20 |
 21
FY12 Financial Highlights
Strong Performance & Execution throughout FY2012
Shipments Down 4% to 2,838 Kilotonnes
Net Sales Up 5% to $11 Billion
Adjusted EBITDA Down 2% to $1.053 Billion
Free Cash Flow Before CapEx of $614 Million
Liquidity of $1 Billion
Net Income, Excluding Special Items, of $218 Million
Net Income of $63 Million
(FY12 vs. FY11)
21 |
 22
Adjusted EBITDA/tonne & Shipments
$176
$279
$361
$371
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
$0
$100
$200
$300
$400
$500
FY09
FY10
FY11
FY12
EBITDA/tonne
Shipments (Kts)
Record EBITDA/tonne Despite 4% Decrease in Shipments |
 23
(Millions)
Free Cash Flow Before CapEx
FY11
FY12
FY13E
FY11
FY12
FY13E
$0
$200
$400
$600
$800
Strong Cash Flow Generation Continues
$544
$614
$600-700 |
 (Millions)
Capital Expenditures
FY11
FY12
FY13E
•
Brazil Mill Expansion
•
South Korea Mill Expansion
•
•
Global Recycling Initiatives
FISCAL 2013 CAPEX:
$234
$516
$0
$200
$400
$600
$800
$650-700
Continued Focus & Execution on Strategic Investments
24
in North America & China
Automotive Capacity Increase |
 25 |
 26
Summary & FY13 Outlook
Executing on our Strategy
•
Taking Action to Strengthen the Business
•
Strategic Expansions Progressing Well
•
Making Progress Towards our Goal of 80% Recycled Content by 2020
Unmatched Global Rolling & Recycling Footprint
Adjusted EBITDA above FY12 $1.05 Billion
•
Demand Recovery Continuing into FY13
Free Cash Flow before CapEx of approximately $600-700 Million
Capital Expenditures of approximately $650-700 Million
|
 27 |
 28 |
 Income
Statement Reconciliation to Adjusted EBITDA (in $ m)
Q1
FY11
Q2
FY11
Q3
FY11
Q4
FY11
FY11
Q1
FY12
Q2
FY12
Q3
FY12
Q4
FY12
FY12
Net Income (loss) Attributable to Our Common
Shareholder
50
62
(46)
50
116
62
120
(12)
(107)
63
-
Interest, net
(36)
(37)
(42)
(79)
(194)
(73)
(73)
(71)
(73)
(290)
-
Income tax (provision) benefit
(15)
(56)
(33)
21
(83)
(59)
7
10
3
(39)
-
Depreciation and amortization
(103)
(104)
(100)
(97)
(404)
(89)
(81)
(79)
(80)
(329)
-
Noncontrolling interests
(9)
(11)
(11)
(13)
(44)
(15)
(10)
(1)
(1)
(27)
EBITDA
213
270
140
218
841
298
277
129
44
748
-
Unrealized gain (loss) on derivatives
(47)
1
9
(27)
(64)
26
(1)
(63)
(23)
(62)
-
Realized gain on derivative
instruments not included in
segment income
-
-
4
1
5
2
-
(3)
2
1
-
Loss on early extinguishment of debt
-
-
(74)
(10)
(84)
-
-
-
-
-
-
Proportional consolidation
(10)
(11)
(10)
(14)
(45)
(13)
(12)
(9)
(15)
(49)
-
Restructuring charges, net
(6)
(9)
(20)
1
(34)
(19)
(11)
(1)
(29)
(60)
-
Loss on assets held for sale
-
-
-
-
-
-
-
-
(111)
(111)
-
Others costs, net
13
(2)
(7)
(13)
(9)
(4)
-
(8)
(13)
(24)
Adjusted EBITDA
263
291
238
280
1,072
306
301
213
233
1,053
Other Income (expense) Included in Adjusted
EBITDA
-
Metal price lag
9
19
-
(3)
25
5
15
8
(19)
9
-
Foreign currency remeasurement
(22)
20
1
9
8
(8)
-
(2)
(4)
(14)
-
Purchase accounting
(3)
(4)
(3)
(3)
(13)
(3)
(3)
(3)
(3)
(13)
29 |
 Free
Cash Flow (in $m)
FY11
FY12
Q1
Q2
Q3
Q4
Full
Year
Q1
Q2
Q3
Q4
Full
Year
Cash Provided by (used in)
Operating Activities
22
102
94
236
454
(115)
171
145
355
556
Cash Provided by (used in)
Investing Activities)
27
(2)
(39)
(99)
(113)
(79)
(40)
(72)
(251)
(442)
Less: Proceeds from Sales of
Fixed Assets
(15)
(3)
(10)
(3)
(31)
0
1
(10)
(7)
(16)
Free Cash Flow
34
97
45
134
310
(194)
130
63
99
98
30 |
 31
Explanation of Other Income (Expenses)
Included in Adjusted EBITDA
1) Metal Price Lag Net of Related Hedges:
On certain sales contracts we experience timing differences on the pass through of
changing aluminum prices from our suppliers to our customers. Additional
timing differences occur in the flow of metal costs through moving average inventory
cost values and cost of goods sold. This timing difference is referred to as Metal
Price Lag. We have a risk management program in place to minimize impact of
this “lag”. 2) Foreign Currency Remeasurement Net of Related
Hedges: All non-functional currency denominated Working Capital and Debt
gets remeasured every period by the period end exchange
rates.
This
impacts
our
profitability.
Like
Metal
Price
Lag,
we
have
a
risk
management
program
in
place
to
minimize impact of such Remeasurement.
3) Purchase Accounting:
Following our acquisition, the consideration and transaction costs paid by Hindalco
in connection with the transaction were “pushed down”
to us and were allocated to the assets acquired and the liabilities assumed. These
allocations are amortized over periods, impacting our profitability.
|