LISTED nickel producer Global Ferronickel Holdings Inc. (FNI), said on Wednesday it is optimistic that it will recover this year after its net income plunged 96.6 percent to P37.5 million in 2016 from P1.11 billion in 2015.
FNI attributed the drop in revenues and profit to sluggish ore prices and poor weather conditions. It said gross revenues fell to P1.46 billion in 2016 from the P3.02 billion recorded in 2015.
“As we enter 2017, we are delighted to see early signs of recovery in nickel ore prices. That is why when we began operations this April, almost two-thirds of our shipment was medium-grade nickel ore, with the remainder low-grade nickel ore,” FNI President Dante Bravo said in a disclosure to the Philippine Stock Exchange (PSE).
“We expect continued drawdown in ore stocks in China to prompt price increases to ultimately balance the markets. More importantly, we are convinced that the urbanization story remains intact and should support stronger demand growth for industrial-focused commodities such as nickel,” he added.
Last year, FNI’s nickel ore shipment fell 19 percent to 4.3 million wet metric tons (WMT) from 5.35 million WMT in 2015.
Bravo said the company took measures to remain profitable and maintain its position as the leading low-cost producer of nickel ore.
“We are confident that our strategic initiatives coupled with positive long-term demand growth trends for stainless steel in China and other markets as well as new uses of nickel in emerging technologies, leave us well positioned to make progress in the year ahead,” Bravo said.
At the start of 2016, Ferronickel said it has taken responsibility of barging operations and increased number of mining contractors for greater flexibility and reduction of operational risks so as to improve operational excellence and efficiencies.
“As a result, total contract costs—comprised of contract hire rates and barging costs—dropped
by approximately 30 percent per WMT,” it said.
“Such measures have contributed to the strength of the company’s balance sheet and allowed it to minimize the amount of capital tied up in fixed assets. At the end of 2016, the company’s leverage and liquidity remain healthy, with current ratio and debt-to-equity ratios improving to 1.52 and 0.44, respectively,” it added.