Global Ferronickel income slides nearly 69% to P195M

GLOBAL FERRONICKEL Holdings, Inc. (FNI) saw its attributable net income fall by 68.9% to P195.65 million for the second quarter from P628.63 million a year earlier amid lower revenues and higher costs and expenses.

“There are risk factors which we cannot predict or control but could adversely affect our business. Weather events such as changes in rainfall patterns that we experienced in Surigao is one of them,” FNI President Dante R. Bravo said in an e-mailed media release.

Nickel ore export revenues fell 8.3% to P1.98 million, which FNI attributed to lower volume shipped and average realized ore price of Surigao mining operations.

Moreover, the company’s expenses increased by 15.6% to P1.58 billion from P1.37 billion a year earlier.

Consolidated net income went down by 56.7% to P266.49 million from P615.58 million a year earlier, it said.

“We continue to assess and monitor such factors. Additionally, our ongoing diversification aims to respond to such risk and ultimately improve FNI’s portfolio quality and performance. ” Mr. Bravo said.

He saw the year-round operations to continue in the Palawan mine brought about by “milder weather” and “a wet season that is not very pronounced.” 

“As we step up efforts to further diversify, the combined strength of the Surigao and Palawan mines enable us to better navigate the short-term challenges ahead,” he added.

The Cagdianao Mine in Surigao del Norte and the Ipilan Nickel Mine in Palawan, both under FNI’s wholly-owned subsidiary Platinum Group Metal Corp., have a combined yearly shipment capacity of 6.5 million wet metric tons (WMT). 

This accounts for 15% of the total nickel ore exports in the country in terms of volume. 

Meanwhile, the company reported a 19.4% decrease in first-half attributable net income to P349.50 million from P433.71 million from the previous year.

In the six months ending in June, revenues increased by 41.2% to P3.1 billion from P2.2 billion last year. While costs and expenses increased further by 37.7% to P2.2 billion from P1.6 billion previously.

Consolidated net income grew by 49.8% to P625.32 million from P417.42 million a year earlier.

“Strong volumes and higher-grade ores at Palawan mine were the main drivers of growth, partially offset by weaker prices and lower-than-average volumes at Surigao mine,” the company said.

Heavy rains prevented the Surigao mine from gaining stronger production and shipment, it said.

Production of nickel ore reached 1.4 million WMT, up 36.7% from 1.08 million WMT last year. Of the total, Palawan mine output rose by 993.2% to 753,098 WMT while Cagdianao mine output dipped by 26.5% to 747,376 WMT.

Total volume of nickel ore sold also climbed by 41% to 1.46 million WMT which comprised 52% medium-grade and 48% low-grade nickel ore.

However, the average realized price went down by 2.2% to $38.37 from $39.21 a year ago, driven by lower selling prices due to expansion of market supply in Indonesia and “muted demand” in China.

Capital expenditures amounted to P145 million or 4.7% of the revenues for the first half, the company said.

“Looking forward, we remain committed to our capital management strategy that is balanced between investing in growth initiatives, providing returns to stakeholders, while maintaining a strong balance sheet,” Mr. Bravo said.

At the local bourse on Thursday, FNI shares went down by two centavos or 0.81% to end at P2.45 apiece. — Sheldeen Joy Talavera