FNI delivers solid 2023 financials with strong growth in revenues and operations

By: Philippine Resources March 20, 2024

Global Ferronickel Holdings, Inc. (PSE: FNI), a leading nickel ore producer in the Philippines, reported revenues of ₱8.8 billion in 2023, operating income of ₱2.8 billion, net income attributable to shareholders of ₱1.5 billion, and earnings per share (EPS) of ₱0.3022.

The 30.5% year-over-year increase in revenues to ₱8.8 billion was largely driven by the higher volume from full-year operations and medium-grade ores from the Palawan mine, which started commercial shipments in September 2022 and became a subsidiary in December 2022. This strong performance offset the lower volumes at the Surigao mine, weighed down by weather, as well as the weaker prices for low-grade ores amid expanded output from mines in Indonesia.

FNI President Dante R. Bravo said: “Our revenues highlight our success in operating the Palawan mine reliably in its first full year of production. This diversification helps improve our cash flows and better positions us to take advantage of opportunities for short- and long-term growth.”

Total sold volume was 4.717 million wet metric tons (WMT), of which 3.297 million WMT were from Surigao and 1.420 million WMT were from Palawan. As a result, the sales mix was 64% low-grade ore and 36% medium-grade ore compared to 76% low-grade and 24% medium-grade in 2022. The average realized nickel ore price was US$33.28/WMT, rising 5.1% on a favorable mix combined with stronger prices for medium-grade ores, which were 11.6% higher than last year.

Cost of sales were up 52.5% to ₱3.6 billion mainly due to greater contract hire and personnel costs following the increase in sales volume from the opening of the Palawan mine. Operating costs remained under control and were relatively flat at ₱2.4 billion, or 27.3% of revenues, as the increase in general and administrative expenses were brought down in part by lower shipping and distribution costs in relation to the softer volumes and reduced freight costs at Surigao. Finance costs rose 73.2% to ₱275.6 million, in line with the recognition of interest expenses resulting from the acquisition of an associate company in 2022.

Consolidated net income decreased 15.9% to ₱1.8 billion due to the high base from last year that included a one-off gain of ₱680 million from a settlement received by a subsidiary in 2022. Excluding this one-time transaction, consolidated net income would have accelerated 22.9%.

After deducting the net income attributable to non-controlling interests, net income to FNI shareholders was down 19.6% to ₱1.5 billion while EPS declined 18.2% to ₱0.3022. Without the one-off impact in 2022, net income attributable to shareholders grew 3.9% and EPS rose 5.8%.

The company’s balance sheet remains robust with net cash of ₱1.3 billion, based on the sum of short-term interest-bearing borrowings of ₱347.3 million and lease liabilities of ₱823.3 million, less cash and cash equivalents of ₱2.4 billion.

FNI also delivered for shareholders through increased returns and capital investment. Dividends distributed amounted to ₱524.2 million and share buyback totaled ₱295.4 million for the year. Capital expenditures reached ₱871.4 million, 42.5% over the previous year. Recent investments have been directed towards expansion in mine facilities, causeway, and land acquisition for future projects.

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