FNI revenue rises 41% in 1H 2023 - Net financial result reflects macroeconomic and weather challenges

By: Philippine Resources August 14, 2023

Global Ferronickel Holdings, Inc. (PSE: FNI) reported consolidated revenues of ₱3.1 billion for the first six months of 2023, up 41.2% from ₱2.2 billion in the prior-year period. 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.

Total sold volume was 1.459 million wet metric tons (WMT), 41.0% higher than in the first half of 2022, comprising 52% medium-grade and 48% low-grade nickel ore. The Palawan mine maintained solid momentum in the second quarter, while activities at Surigao mine reflected constraints in the operating environment stemming from heavy rains which 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 Dante R. Bravo, President. “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.”

The average realized nickel ore price was US$38.37/WMT, down 2% compared to US$39.21/WMT a year ago, due to available product mix and lower selling prices in the second quarter, which were affected by expanded market supply from capacity additions in Indonesia and muted demand in China following a tepid postpandemic reopening.

The average realized exchange rate was ₱55.34 to the U.S. dollar as against ₱52.60 in the previous year.

Consolidated net income of ₱625.3 million grew 49.8% versus last year. After deducting net income attributable to non-controlling interests, net income attributable to FNI shareholders was ₱349.5 million, down 19.4% year-on-year, with the share in the net income of an associate of ₱54.0 million cushioning some of the impact. Earnings per share of ₱0.0676 decreased 18.9% following the lower net income, partially offset by an approximate 0.6% 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₱145.0million or4.7% of revenues. Dividends paid were ₱524.2 million or ₱0.10 per share, representing 27% of the prior year’s net income attributable to equity holders which is higher than the dividend policy of 20%. FNI also returned ₱48.0 million to shareholders through share buyback. Overall, the company has repurchased shares worth ₱2.5 billion since the buyback program was launched in 2016, equivalent to 18% of outstanding shares.

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