Novelis sees better H2 as profit sinks 74 pct year on year

Mon Nov 11, 2013 11:30am EST
 
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* Earnings hurt by overcapacity in North American can market

* Novelis sees global flat-rolled product demand rising

NEW YORK Nov 11 (Reuters) - Novelis Corp said on Monday it expects better results in the second half of its fiscal year as it shifts its focus to the automotive sector after reporting a plunge in profits due to the saturated North American beverage can market.

Net income in the first half to end-September sank 74 percent to $37 million compared with the year-earlier period as sales fell 3 percent to $4.84 billion.

Overcapacity in the North American can market hurt year-on-year results, Novelis said. Shipments in the region were down 12 percent from last year and flat sequentially.

"The reallocation of some hot mill capacity towards high-growth, high-margin automotive sheet in this region (....) will help rebalance the North American can market," said President and Chief Executive Phil Martens in a statement.

Many aluminum producers say the metal, which is lightweight, is winning market share from steel in the automotive market.

Stricter fuel emissions rules in major markets mean cars have to become more fuel-efficient and less polluting, which in most cases means they will have to be lighter.

Novelis forecast on Monday annual global flat-rolled product demand will increase to 28 million tonnes by 2020 from 18 million in 2012, with growth from the automotive sector outpacing foil and beverage cans.   Continued...