rose 6% after the struggling aluminum company forecast a steep 2006 loss but said it expects to return to the black on a pretax basis next year.
The Atlanta-based can stamper said it expects to lose between $240 million and $285 million for 2006. But the company expects to swing to a pretax profit of $35 million to $100 million for 2007, thanks to the elimination of half of a can sheet price ceiling exposure, expected increases in rolled product shipments, and expected corporate cost reductions.
spinoff shocked Wall Street last month with news of an unexpected 2006 loss. The unhappy surprise cost CEO Brian Sturgell his job and led to a restructuring plan. Novelis continues to work on an earnings restatement.
Novelis expects total free cash flow for 2006 to be between $150 million and $200 million, and believes it will remain in that range for 2007 as the company improves its risk mitigation program.
Novelis said 2006 capital spending will fall to $110 million to $115 million but will recover to "traditional investment levels of between $165 million and $175 million" next year.
The company reiterated that it is on track to file its Form 10-Q for the second quarter by Oct. 20 and to be current with its filings once it files its third-quarter report during the fourth quarter.
The company said commitments for backstop financing facilities have been extended to Oct. 31. In the event that Novelis is not able to file its quarterly report on Form 10-Q for the second quarter on time, the backstop financing facilities would provide the funding necessary to retire its senior notes and, if needed, replace an existing term loan and revolving credit facility.
In addition, Novelis will ask for an amendment to its $1.8 billion credit agreement to modify certain financial covenants and other provisions contained in the agreement. Specifically, Novelis will request that the lenders under the credit agreement temporarily relax the interest coverage covenant, leverage ratio covenant and fixed charges covenant, among other things.
Shares rose $1.40 to $24.38.