NICKEL Asia Corp. said net profit fell 43% in the nine months to September due to weak nickel prices as well as a stronger peso and investments in loss-making processing plants.
In a disclosure Friday, the miner said it booked a P1.917 billion in its preferred form of reporting profit — net income attributable to equity holders — against P3.366 billion a year earlier.
It said earnings before interest, tax, depreciation, and amortization (EBITDA) declined 24% to P4.60 billion.
“The drop in the company’s earnings is mainly due to a combination of a weaker average nickel ore price, a stronger peso and the company’s share of losses from its investment in both the Coral Bay and Taganito processing plants,” Nickel Asia said.
It owns 10% of the two processing plants and its total share of losses amounted to P85 million, after recognizing P617 million worth of earnings a year earlier. The plants reported losses after the price of cobalt fell to $16.46 per pound from $39.05 a year earlier. Cobalt is a by-product of both plants.
The company sold 15.29 million wet metric tons (WMT) of nickel ore in the first nine months, down from 15.55 million a year earlier.
Of the total ore shipments, 7.47 million WMT was saprolite ore, down 12% year-on-year, and 7.82 million WMT was limonite ore up 11%, which included 6.34 million WMT delivered to both Coral Bay and Taganito plants, which was up 9%, year-on-year.
“The company was not able to fully benefit from the effect of higher prices during the period under review as the run-up in ore prices only started in the latter part of the third quarter,” Nickel Asia President Martin Antonio G. Zamora said.
The appreciation of peso to dollar also led to foreign exchange losses of P105 million from gains of P647 million reported in the same period last year. Realized peso to dollar exchange rate for ore sales was P51.89 from P52.89, year-on-year.
It realized an average price of $5.96 per pound of payable nickel ore shipments to both processing plants in the period, according to London Metal Exchange (LME) reference prices. A year earlier, the average price was $6.21.
In terms of exports, the company realized a higher average price of $21.49 per WMT from $20.79 a year earlier. The average price generated from the sale of saprolite and limonite ores fell 6% to $15.84 per WMT.
“The company expects a strong performance for the remainder of the year due to the higher prices contracted on its remaining shipments coupled with the anticipated return to profitability for the two processing plants,” Mr. Zamora said.
Nickel Asia fell 1.53% to close at P3.86 on Friday. — Vincent Mariel P. Galang