INTERVIEW - Novelis bullish on aluminum prospects

 Novelis, which recycles cans to make aluminum products, expects earnings to almost double in the next four years as demand increases, especially from automakers, its chief executive said on Tuesday.

Philip Martens also expects the price of aluminum to remain around $2,600 to $2,700 per tonne for the foreseeable future, even as the global economy shows signs of strengthening.

"Demand is high -- we're sold out," Martens told Reuters in an interview on the sidelines of an aluminum industry conference in New York.

"Our factories, in principle, are running at 100 percent (capacity), some of our factories are running at 120 percent. We're working feverishly to de-bottleneck, or increase throughput capacity in all of our major factories worldwide."

Novelis, a subsidiary of India's HindalCo Industries Ltd (HALC.NS), reported on May 26 a fiscal fourth-quarter profit of $50 million on a 22 percent rise in sales to $3 billion. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the full fiscal year rose 42 percent to a record $1.07 billion.

Asked to characterize 2012 results, Martens said he expected EBITDA to increase slightly to between $1.15 billion and $1.2 billion.

"The goal is to nearly double EBITDA to $2 billion by the end of 2015," he said. "We're extremely bullish on long-term prospects for aluminum."

The Atlanta-based company is expanding sheet metal capacity to handle an expected increase in worldwide demand from automakers. Currently, Novelis produces about 3 million tonnes of aluminum products, of which about 240,000 tonnes, or 7 percent, is for the automobile industry.

Martens said that amount will more than double to about 550,000 tonnes in four years, as carmakers use more aluminum in their models to lower the weight and increase fuel efficiency.

Novelis said it will build a new plant in North America to increase total North American aluminum capacity by 20 percent and is expanding its plant in Brazil to increase aluminum production for cans.

Asked if he saw the aluminum price reaching back above its pre-recession level of $3,000 per tonne, Martens said there was not enough capacity in place to support overall demand.

"If you look at can bodies, we could sell as much as we can make worldwide, but there just isn't enough conversion capacity.

"But look at the outlook for aluminum -- aluminum demand is continuing to increase."

Martens said there was a lot of metal held in warehouses by investment houses and those inventory levels were expected to hold steady at about 4-? million tonnes.

"That's going to hold the price where it's at, around $2600 maybe $2700," he said.

Martens said the U.S. economy appeared stronger than a year ago.

"The underlying fundamentals are clearly stronger than they were 12 months ago and significantly stronger than they were 24 months ago," he said.

"So I think the United States will move along sideways with a slight increase in the back half of the year. Economic confidence worldwide is still strong."