Novelis posts profit, but production disruptions weigh

Tue Feb 12, 2013 10:06pm IST

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REUTERS - Novelis Inc, the world's largest producer of rolled aluminum products, reported a quarterly profit on Tuesday after a year-earlier loss, but said production disruptions from a new software system held back results.

The company, a unit of HindalCo Industries Ltd (HALC.NS), said the transition to a new enterprise resource planning (ERP) system in North America led to lost shipments and lower productivity in the fiscal third quarter to December 31.

Net sales fell 5.7 percent to $2.32 billion. Shipments were little changed at 647,000 tonnes, compared with 648,000 tonnes a year earlier, in part because of the teething pains, which the Atlanta-based company's chief executive said had been worse than expected.

"These implementation issues are largely behind us and production has returned to near normal levels," Chief Executive Phil Martens said in a release.

Net income attributable to its common shareholders for the fiscal third quarter came in at $3 million, compared with a loss of $12 million a year earlier.

The company said results were also held back in part by "unfavorable pricing dynamics" in some regions, and higher input costs in North America.

Novelis expects its operating performance to improve, and said it expects fourth-quarter earnings before interest, taxes, depreciation and amortization to be higher than in the fourth quarter a year earlier.

(Reporting by Allison Martell; Editing by Maureen Bavdek and Andrew Hay)

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