Global Ferronickel profits plunge 97%

GLOBAL FERRONICKEL Holdings, Inc. (GFNi) saw profits fall by over a billion pesos last year, amid lower volumes and a slump in nickel ore selling prices.

In a regulatory filing, the country’s second top nickel supplier said its net income plunged 97% to P37.5 million in 2016, from P1.11 billion in 2015.

Gross revenues dropped by 51% to P1.46 billion last year, from P3.02 billion in 2015.

GFNi said sale of nickel ore generated total export revenues of P3.77 billion, 42% lower from 2015’s P6.53 billion. This was attributed to “lower volume shipped, change in product mix and decline in the selling price of nickel ore.”

Total nickel ore shipped last year from its Cagdianao mine in Surigao del Sur, its lone operating mine, reached 4.309 million wet metric tons ( WMT) of nickel ore, 19% lower than the 5.352 million WMT of nickel ore exported in the prior year. The shipments were delivered solely to customers in China.

“The reduction in shipments was brought about by unfavorable weather conditions which affected production and loading operations. The decrease in the export revenues was aggravated by the decline of nickel ore price from last year’s average of US$ 26.69/ WMT to only US$ 17.93/ WMT average for the year ended Dec. 31, 2016 lower by US$8.76/WMT or 33%,” GFNi said.

Cost of sales likewise decreased by 34% to P2.3 billion for 2016, compared to P3.5 billion a year ago.

“The decrease in cost of sales was due to decline in the volume shipped, change in product mix as more low grade ores were shipped in 2016 as compared to the same period in 2015 and as the result of cost rationalizations and greater operational efficiencies,” the nickel miner said.

During the period, GFNi’s operating expenses fell 29% to P1.25 billion from the P1.77 billion in the prior year.

Earlier this month, GFNi said its mine in Cagdianao, through its wholly owned subsidiary Platinum Group Metals Corp., (PGMC), began delivery of nickel ore to China.

PGMC has earlier signed supply agreements for the delivery of up to 4 million WMT at prevailing market prices to several “long-standing” customers based in China.

The company is hoping to secure more supply deals to match its export target of 6 million WMT for 2017.

Trading of GFNi shares dropped 0.74% to close Monday at P2.68 apiece. —