Aluminum roller and recycler Novelis reported second-quarter fiscal 2026 results that reflected higher aluminum prices, but cited headwinds including tariffs, elevated scrap costs and recovery work from a September fire in Oswego, New York.
The company expects tariff-mitigation measures to take effect in the next six months, including accessing more US capacity, passing through added costs to customers and continuing advocacy work with federal officials over relief on Section 232 duties. During the webcast, CEO Steve Fisher said the company faces “about $60 million in net tariffs per quarter” and expects mitigation efforts “to significantly start to reduce that in the second half of fiscal 2026.”
Fisher reiterated that demand for “infinitely recyclable, lightweight aluminum” remains strong across automotive, aerospace, building and packaging markets. He also said, “We continue to see strong demand, particularly for aluminum beverage packaging sheets, which is our largest in market.”
Net sales climbed 10% to $4.7 billion, driven mainly by higher average aluminum prices. Slightly higher automotive and aerospace shipments offset lower beverage packaging and specialty volumes in the quarter.
CFO Dev Ahuja said higher product pricing and ongoing cost-efficiency actions partly countered the tariff headwinds and rising scrap prices during the period. Management described scrap markets as stable to improving, particularly in North America where scrap benefit and availability have strengthened.
As for operations, Fisher said Novelis remains on track to restart the hot mill at its Oswego plant in December after a Sept. 16 fire halted operations. “With expectations to restart the hot mill next month, the impact on the outage is primarily a factor of timing, with a headwind this fiscal year to largely be recovered next year,” he said. Fisher also told investors, “We currently estimate approximately 70 to 80% of these impacts will be recovered through insurance in future periods.”
Ahuja outlined the near-term earnings effect from the outage, saying “the impact on EBITDA from Oswego between Q3 and Q4 could be of the order of $100 million to $150 million.” Regarding which quarter would bear the larger hit, he said, “[It] will probably be in the ballpark of losing about 75,000 [metric tons] in Q3. There could be a little bit of spillover into Q4, but the majority of the $100 to $150 [million] would be Q3.”
Construction also continues on the company’s Bay Minette, Alabama, greenfield rolling and recycling complex. Novelis now estimates total project capital cost in the order of $5 billion. The site will have 600,000 metric tons of finished-goods capacity upon completion. About 420,000 metric tons would be directed toward beverage packaging under long-term contracts, together with 180,000 metric tons primarily for automotive applications, with flexibility to supply other markets. Commissioning of the cold mill is scheduled for the fourth quarter of fiscal 2026, which ends March 31, with full plant commissioning expected in the second half of calendar 2026.
Despite near-term pressure from tariffs and the Oswego outage, Fisher said Novelis is advancing investments that aim to capture growing demand for sustainable aluminum flat-rolled products while the company works to restore capacity, mitigate customer disruption and defend margins through cost actions.
