Novelis saw less financial benefit from using recycled material last year due to low virgin aluminum pricing. Meanwhile, the company is experiencing recycled material supply disruptions due to COVID-19.
The aluminum recycling and rolling company this month reported $11.22 billion in sales for the 2020 fiscal year, which ended March 31, down from $12.33 billion in 2019. But the company increased earnings to a record level, reporting $1.47 billion, up from $1.37 billion in 2019.
The earnings increase came from operational efficiencies and several favorable business conditions, the company wrote, but was “partially offset by less favorable recycling benefits due to lower aluminum price.”
In fiscal year 2020, Novelis used 60% recycled material and 40% virgin, down slightly from 61% recycled material in the prior fiscal year.
By weight, the company consumed 2.17 million short tons of recycled aluminum in 2020, compared with 1.47 million short tons of virgin material. That’s slightly down from 2.19 million short tons of recycled aluminum in 2019, but it’s still higher than previous years: The current 60% recycled material percentage is up from 33% in 2011.
The company sources recycled aluminum from UBCs, post-industrial scrap, automobiles, C&D debris, and more. During the recent fiscal year, Novelis recycled more than 74 billion UBCs, according to the report.
The majority of the company’s North American output is directed toward the beverage can market, according to the report. The automotive sector makes up another significant market.
Novelis reported seeing greater demand for aluminum products, a trend the company attributes to public interest in “more sustainable beverage packaging options,” including widely recyclable products.
The company reported several impacts due to the coronavirus pandemic, including disruptions in the global aluminum supply chain. Some of Novelis’s customers and suppliers have suspended operations due to the pandemic, and Novelis itself has adjusted schedules and suspended operations at some of its plants.
“We have also experienced difficulties accessing adequate supplies of scrap aluminum in certain locations,” the company wrote. “Due to the unpredictable nature of the pandemic and resulting macroeconomic impact, these disruptions may continue to adversely impact our business.”
Additionally, the company has delayed capacity expansions that were planned at its Guthrie, Ky. facility and a Chinese production plant, because of the coronavirus impact.
Novelis operates 22 manufacturing facilities globally, with recycling operations in 12 of those plants. The company’s North American footprint includes eight aluminum production facilities with four recycling operations.
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