- 17 Apr 2025
- ICICIdirect Research
ALCOA, ONE OF THE GLOBAL INDUSTRY LEADERS IN ALUMINIUM, REPORTED STEADY PERFORMANCE FOR Q1CY25
HINDALCO - 658 Change: 0.80 (0.12 %)News: Alcoa, one of the global industry leaders in aluminium, reported steady performance for Q1CY25. Sales volume for Q1CY25 stood at 567 KT, (flat QoQ). Total operating income came in at $3,369 million (down 3% QoQ). Adjusted EBITDA for the quarter came in at $855 million (up 26% QoQ) with EBITDA/ton at $1503 vs ($1200 in Q4CY24). The potential impact from US tariff will be net ~$100 million annually (~70% aluminium source from Canada).
View: During Q1CY25, higher aluminum prices supported company EBITDA, while overall U.S. demand stayed stable. However, automotive demand in North America and Europe remained weak. Going forward, the price and demand outlook remains uncertain due to ongoing tariffs. Additionally, as per the company, the Midwest premium rose to ~$880/ton (from ~$600/ton level reported in Jan'25) but fell short of expectations due to high U.S. inventory, which, once depleted, could push premiums higher. Thus, our coverage company, Hindalco’s U.S. subsidiary, Novelis, is expected to show a similar performance, with higher mid-west premiums will provide benefits in the coming quarter. Additionally, the tariff impact on Novelis should be minimal, as less than 30% of its aluminum is sourced from Canada. On that front, we remain positive on Hindalco supported by strong demand for aluminium and copper, strategic capacity expansions at Novelis and Hindalco, and controlled leverage with a Debt-to-Equity ratio of ~0.5.
Impact: Neutral