Hindalco subsidiary Novelis working to mitigate tariff headwinds, expects resilient demand for aluminium

The company is aiming to defend volumes through tariff mitigation strategies, after it shared that the Q1FY26 adjusted EBITDA includes a net negative tariff impact of $28 million.

Novelis told analysts during an investor call on August 11 after June quarter earnings that despite tariff-related pressures, the aluminium smelting company is eyeing long-term growth through its Alabama greenfield rolling and recycling plant that will have a 600kt capacity upon completion.

The company is aiming to defend volumes through tariff mitigation strategies, after it shared that the Q1FY26 adjusted EBITDA includes a net negative tariff impact of $28 million.

The Hindalco subsidiary has projected the FY26 capex to be in the range of $1.9-2.2 billion. Novelis CFO Dev Ahuja said the company is 'finding opportunities' to streamline costs, in response to the 'challenging external environment'. US President Trump’s 50 percent tariff on steel and aluminium is expected to impact prices of electronics, cars and several other products.

The management said it is confident of 'resilient' demand for aluminium packaging, and sees strong growth to continue in packaging. "We continue to see strong demand for aluminum beverage packaging sheet supporting top-line growth and the need for new capacity under construction at our plant in Bay Minette, Alabama," Steve Fisher, President and CEO of Novelis Inc said.

High prices for aluminium scrap hurt the financial performance for the June quarter, but the company is making 'solid progress' on cost reduction which is expected to lower cost base and improve margins, the CEO added.

Novelis added that it is looking to accelerate cost reduction steps, which can drive higher cost savings in FY26, and over $300 million by end of FY28. Due to tariff-related uncertainty, Novelis had withheld volume and margin guidance for FY26.