Global Ferronickel Holdings, Inc. (PSE: FNI) announced consolidated revenues of P3.1 billion for the first six months of 2023, up 41.2 percent from P2.2 billion in the prior-year period.
Strong volumes and higher-grade ores at Palawan mine were the primary drivers of growth, partially offset by weaker prices and lower-than-average volumes at Surigao mine.
Total sold volume was 1.459 million wet metric tons (WMT), 41.0 percent higher than in the first half of 2022, comprising 52 percent medium-grade and 48 percent low-grade nickel ore. The Palawan mine sustained solid momentum in the second quarter, while activities at the Surigao mine reflected constraints in the operating environment due to heavy rains that prevented stronger production and shipment.
“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,” said its president Dante R. Bravo.
“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. The Palawan mine benefits from milder weather and a wet season that is not very pronounced thereby allowing year-round operations. It also adds greater scale to our resources and reserves and points to long-term business volume. 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 average realized nickel ore price was $38.37/WMT, down 2 percent compared to $39.21/WMT a year ago, due to the available product mix and lower selling prices in the second quarter. These prices were influenced by expanded market supply from capacity additions in Indonesia and muted demand in China following a cautious post-pandemic reopening.
The average realized exchange rate was P55.34 to the U.S. dollar, compared to P52.60 in the previous year.
Consolidated net income of P625.3 million surged by 49.8 percent compared to last year. After deducting net income attributable to non-controlling interests, net income attributable to FNI shareholders stood at P349.5 million, a decline of 19.4 percent year-on-year. However, the impact was partially mitigated by the share in the net income of an associate, amounting to P54.0 million. Earnings per share were P0.0676, showing an 18.9 percent decrease due to the lower net income. This was somewhat offset by an approximate 0.6 percent reduction in average shares outstanding resulting from the company’s share buyback program.
“Looking forward, we remain committed to our capital management strategy that is balanced between investing in growth initiatives, providing returns to shareholders, while maintaining a strong balance sheet,” Bravo added.
During the first half, capital expenditures amounted to P145.0 million or 4.7 percent of revenues. Dividends paid were P524.2 million or P0.10 per share, representing 27 percent of the prior year’s net income attributable to equity holders. This figure is higher than the dividend policy of 20 percent. FNI also returned P48.0 million to shareholders through share buyback. In total, the company has repurchased shares worth P2.5 billion since the buyback program was initiated in 2016, which is equivalent to 18 percent of outstanding shares.