Novelis sees aluminum demand, consumer growth

 

　　* Sales rise 23 pct to $3.1 bln

 

　　* CEO sees Q2 results flat to slightly better (Rewrites, adds CEO comments, outlook)

 

　　NEW YORK, Aug 9 (Reuters) - Aluminum products maker Novelis expects strong demand from the auto industry to offset softness in the U.S. beverage can business and a pullback by European electronics consumers, its chief executive said on Tuesday.

 

　　Phil Martens said fiscal second-quarter results could be slightly better than a year ago as the company forges ahead with plant expansions to handle expected growth in aluminum consumption.

 

　　"The market demand for aluminum continues to be very strong," he told Reuters in a telephone interview after Novelis reported improved fiscal first-quarter results.

 

　　Martens said demand in Europe was stronger than the company expected, while in North America it was higher year-over year.

 

　　In the automotive market, "the story is about global demand," he said, noting the number of high-end cars with major aluminum parts being sold into Asian markets. Also, U.S. automakers were expected to produce some 12 million vehicles this year, so "net-net, shipments in the U.S. are up."

 

　　However, Martens said there was some softness in the U.S. beverage can market, in part due to cool and wet spring weather during the March-June period.

 

　　Asked to characterize his outlook for the 2012 fiscal second quarter ending September 30, in light of the recent stock market drop, Martens said:

 

　　"You have to be cautious to not get carried away on a consumer level with what is happening. But it could have a dampening effect in August, maybe into September.

 

　　"But the U.S. economy is still operating at a higher level of consumption than a year ago - and we still expect that, so we see a flat to slightly better performance," said Martens who is also Novelis' president.

 

　　In its earnings release, Novelis said fiscal first-quarter profit rose 24 percent, driven mostly by higher prices and strength in its global beverage can and automotive markets.

 

　　Net income in the quarter, ended June 30, was $62 million, up from $50 million a year earlier, said the Atlanta-based company, which is a subsidiary of India's HindalCo Industries Ltd (HALC.BO).

 

　　Sales rose 23 percent to $3.1 billion, while earnings before interest, taxes, depreciation and amortization (EBITDA) climbed 16 percent to $306 million. Shipments of aluminum rolled products totaled 767,000 tonnes, up 3 percent.

 

　　Martens said Novelis was on track to add 1 million tonnes of capacity through expansion projects in Brazil and South Korea and an automotive investment in the United States.

 

　　The company said it expects to generate $600 million to $700 million of free cash flow in fiscal 2012 before capital expenditures, and expects to invest $550 million to $600 million, primarily for its global expansion projects.

 

　　It said it is on track to achieve $1.15 billion to $1.2 billion in adjusted EBITDA in fiscal 2012.

 

　　Globally, Martens said he expects aluminum demand from the auto industry to increase by 25 percent by 2015, with demand from the electronics sector growing 10 percent to 15 percent and demand from the can sector growing 4 percent to 5 percent.

 

　　Chief Financial Officer Steve Fisher said there had been some demand pullback in Europe for electronics, particularly in flat-screen televisions, but the sector was strong in Asia.

 

　　In Europe, Novelis has seen a shift in the beverage packaging sector toward aluminum from steel and glass, while the auto sector is still very strong.

 

　　Asked if the recent volatility in global stock markets would affect Novelis' expansion projects, Fisher said, "We have zero intent to slow any projects down."

 

　　Noting its cost-cutting over the last three years, he said Novelis was "confident to weather whatever comes at us."

 

　　"We are on track and able to fund them," he said of the expansion projects. "They should give us a big competitive advantage in one to three years."