Global Ferronickel expects flat earnings this year

GLOBAL Ferronickel Holdings, Inc. (FNI) expects net income to be flat this year, despite seeing stronger demand for nickel ore from China.

“[ This year’s] growth will be relatively the same as last year. We expect the same results from last year,” Global Ferronickel President Dante R. Bravo told reporters on Wednesday.

FNI’s net income stood at P779.7 million in 2017, nearly 20 times more than the P37.5 million it recorded in 2016, due to better selling prices and “favorable” foreign exchange impact.

While nickel prices are expected to steadily rise this year, Mr. Bravo said the company’s bottom line will be affected by the new tax law and tighter regulatory requirements.

“You combine the impact of the excise tax and the other collateral impact plus the increase in regulatory requirements, plus the environmental cost, then it has affected our bottom line,” he said.

“Even if we expect a better price compared to last year but because of the impact of the bottom line, it will be offset by whatever it is that we have.”

However, the company expects to benefit from the continued peso depreciation, as it exports to China.

“What is consoling, because we are an exporter, the peso has depreciated by 6% so that means an additional 6% also. If your cost has risen by say, 10%, then there is only a net loss of 4%,” Mr. Bravo said.

Global Ferronickel is also looking to take advantage of rising demand for electric vehicles, which make use of nickel as a raw material in manufacturing.

“Every year there is an increase in production, an increase in demand of electric vehicles, the estimate is at around 30% to 40% globally but in China it’s increasing more than. The biggest producer of e-Vehicles is China at this point, more than Tesla,” Mr. Bravo said.

While Indonesia is its main competitor as a nickel ore supplier to China, Mr. Bravo said the firm has an advantage. “We’re close to China and our ores are capable of being smelted in China,” he said.

This year, the company is eyeing to ship 6 million wet metric tons of nickel ore.

At the same time, Mr. Bravo said the company is looking to add limestone to its portfolio, after it found a large deposit of the mineral in a one- hectare lot in one of its mines.

This will give the company an opportunity to expand to the cement business, allowing it to take advantage of the strong demand for construction materials amid the government’s “Build Build Build” program.