Nickel Asia income drops 40% on lower market prices

MANILA, Philippines — Nickel Asia Corp. saw its net income for the first nine months of the year drop by 40 percent amid lower production and the decline in world market prices.

In a regulatory filing, Nickel Asia said its net income amounted to P2.64 billion in January to September, down 39 percent year on year.

Earnings before interest, tax, depreciation and amortization also declined 24 percent to P4.6 billion.

Nickel Asia president Martin Antonio Zamora said the drop in earnings was 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.

“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 at the latter part of the third quarter,” Zamora said.

“However, 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,” he said.

Nickel Asia said the lower earnings during the period was due to the impact of a strengthening peso relative to the US dollar, resulting in a net foreign exchange loss of P105 million from a gain of P647 million last year.

The realized peso-US dollar exchange rate for ore sales during the first three quarters was P51.89 compared to P52.89.

It also reported a consolidated net loss of P85 million from its equity investments in Coral Bay Nickel Corp. and Taganito HPAL Nickel Corp.

The loss from the two plants was mainly driven by the huge fall in cobalt prices, a by-product of both plants. The average realized cobalt price was $16.46 per pound of payable cobalt compared to $39.05 for the same period last year.

Overall, Nickel Asia sold an aggregate 15.29 million wet metric tons (WMT) of nickel ore, down 1.67 percent.

In terms of prices, the firm realized an average $5.96 per pound of payable nickel on its shipments, lower than the average price of $6.21 per pound of payable nickel in 2018.

As to export sales, prices are quite better at $21.49 per WMT but on a combined basis, the average price received for sales of both ore exports and ore deliveries was only $15.84 per WMT from $16.86 per WMT last year.

The firm’s total operating cash costs went up four percent to P8.48 billion.

Nickel Asia is the country’s largest producer of lateritic nickel ore and is one of the largest in the world. It exports saprolite and limonite ore to processors in China and Japan, and sells limonite ore to downstream processing plant affiliates.