Global aluminium rolling and recycling firm Novelis has reported a new loss of $60 million (£38 million) for the first quarter of its 2016 financial year.
Excluding the impact of non-operational metal price lag in both periods, adjusted EBITDA was $212 million in the first quarter of fiscal 2016, down 9% from $233 million in the previous year.
The decrease was primarily driven by higher costs associated with the start-up and support of new automotive finishing and recycling capacity, partially offset by favourable product mix due to a strategic shift to grow automotive shipments.
Prices for aluminium have shifted downward in recent weeks, which has caused a negative price lag effect on these results. Although Novelis uses derivative contracts to minimise the price lag associated with LME aluminium prices, it does not use these in local markets where they are not prevalent.
While future aluminium prices are difficult to predict, it does not expect a negative lag of this magnitude to repeat.
Novelis president and chief executive Steve Fisher said: “We remain focused on the fundamentals of our manufacturing operations – growing our premium portfolio, managing costs and working capital, and driving operational excellence.
“The first two automotive finishing lines at Oswego are ramping up production capacity to meet current market demand, including supply for the aluminium intensive 2015 Ford F-150. We will continue to increase production to fully utilise these lines and rationalise our cost base to increase profitability.”