Hindalco Expects Up to $650 Mn Hit Due to US Plant Fire

Aditya Birla Group’s aluminium unit, Hindalco, said on Wednesday that it expects an impact of about $550 million to $650 million on FY26 free cash flow due to a fire incident at one of its plants in the US. The company had earlier informed stock exchanges that a fire broke out on September 16 at its Novelis plant in Oswego, New York.

On November 5, Novelis provided an update on the incident, estimating that around 70–80% of the losses will be recoverable through insurance in future periods. For Q2 FY26, Novelis recognised $21 million in related charges and expects a negative free cash flow impact of approximately $550–650 million for FY26, including an adjusted EBITDA impact of $100–150 million.

Extensive restoration work is underway to resume normal operations at the facility, Hindalco said.

The damage was largely confined to the hot mill area, and teams have been working around the clock to restore operations safely while using alternative resources to reduce disruption to customers, the company stated on November 4.

On Wednesday, Hindalco said it expects the hot mill to restart by the end of December 2025, followed by a production ramp-up period of four to six weeks.

On November 4, Novelis reported a 27% year-on-year rise in net income attributable to its common shareholder at $163 million for the second quarter of FY26. Excluding special items, net income declined 37% to $113 million. Adjusted EBITDA fell 9% to $422 million, with rolled product shipments steady at 941 kilotonnes. Adjusted EBITDA per tonne dropped 8% year-on-year to $448.

Net sales rose 10% year-on-year to $4.7 billion, driven by higher aluminium prices. Gains in automotive and aerospace shipments were offset by softer demand for beverage packaging and speciality products. The improvement in net income was mainly supported by favourable metal price lag and lower costs related to last year’s Sierre flood. However, margins were affected by higher aluminium scrap prices and tariffs.

For the first half of FY26, operating cash flow stood at $411 million, while adjusted free cash flow recorded an outflow of $499 million, compared with an inflow of $345 million a year earlier. Capital expenditure rose 27% to $913 million, reflecting investments in new rolling and recycling capacity, particularly in the upcoming greenfield plant at Bay Minette, Alabama.

Hindalco is scheduled to report its second-quarter results on November 7.