Nickel firm profit down 35% on higher costs, taxes

The country’s second-largest nickel producer Global Ferronickel Holdings Inc. (FNI) saw its net profit decrease by 35 percent last year on the back of “challenging marketing conditions” and higher taxes imposed by the government.

In a disclosure to the local stock exchange, FNI said its revenue and net income for 2018 were down to P5.5 billion and P509.5 million, respectively, from P5.8 billion and P779.7 million in 2017 “as the company had to contend with higher taxes and an increase in operational costs.”

Due to stricter regulatory policies, FNI was slapped with a 200-percent jump in local business taxes and an increase in excise to 4 percent from 2 percent.

Nonetheless, FNI remained profitable due to “the management’s decision to shift to selling higher grade ores and favorable foreign exchange rates.”

The overall weakness of nickel ore prices led the company to focus on selling higher grade ores. Despite an 18.4-percent and 8.7-percent decline in lower-grade and medium-grade ore, respectively, FNI closed the year with an average nickel price of $18.07 per wet metric ton—down by just 6.3 percent compared to 2017.

FNI was able to ship a total volume of 5.7 million WMT during the period.

“We have proven time and again that our organization remains resilient to withstand changing regulatory landscape, tax regime and market conditions,” FNI president Dante Bravo said.

For this year, the government is planning to impose a 1-5 percent margin-based royalty tax on large-scale mines and a 1-10 percent windfall profit tax this year.

Even with higher taxes, international research group Fitch Solutions said global nickel production was seen to grow over the next years with Indonesia and Philippines expected to increase their respective output.

It cited FNI as one of the companies that “will account for the vast majority of nickel production in the country.”