NIKL and EPI 1H2023 Highlights

Nickel Mining

  • Revenues decreased by 8% YoY to P10.9 billion due to lower nickel ore prices which weighed down the positive impact from higher shipment (+17% more exports) and favourable FX rates.

  • The lower nickel ore prices in the 2nd quarter are due to the oversupply of Class 2 nickel from Indonesia and the weaker than expected Chinese stainless-steel demand. The narrowing deficit in Class 1 nickel world supply has also impacted Nickel LME prices.

  • Consolidated EBITDA totaled P4.79 billion, down 25.7% YoY.

  • Reported attributable net income is P1.7 billion, down 56% YoY due to lower ore prices in 2Q-23 impacting both ore revenues and the profitability of our investments in the HPAL plants.

  • Excluding the company’s equity interest in the two HPAL projects, attributable net-income (net of minority interest) declined by 33% to P1.8 billion YoY due to lower nickel ore prices. The losses incurred by the HPAL plants were due to lower YoY nickel and cobalt prices and maintenance costs related to plant maintenance.

  • HPAL operations registered loss of P77M due to lower nickel and cobalt prices, as well as additional repairs and maintenance costs incurred.

Renewable Energy (Emerging Power Inc.)

  • Jobin-SQM Inc. (JSI) now operating a total capacity of 100-MW from 62 MW YoY; generation up 54% YoY to 76,375-megawatt hours.

  • JSI’s 1H-23 Revenues up 81% YoY to P390.6 million.

  • JSI’s EBITDA up 86% YoY to P330.8 million; net income up 19% YoY to P56.45 million.

  • JSI’s additional 72 MW in Subic site on track to commercially operate by 4Q2023.

  • 145-MW plant pre-development activities underway with EPI’s other long-term lease agreement with the Subic Bay Metropolitan Authority (SBMA), with construction expected to begin in early 2024.

  • Leyte Phase 1 -120 MW project under Greenlight Renewables (JV with Shell) to start construction in 3Q2023.

  • Ongoing discharge testing for 2 MW pilot of Biliran Geothermal. Finalizing development of 10-20 MW, with the goal of achieving 50 MW.

Financial Highlights (1H’23 vs 1H’22)

2019
2020
2021
2022
1H2023
1H2022
EBITDA margin
36%
43%
53%
51%
44%
55%
Net income margin
21%
26%
39%
38%
26%
45%
Ave. Ni LME price per pound (US$)
6.32
6.25
8.39
11.21
10.70
12.54
Average price in US$/WMTOre Exports
23.52
33.99
40.40
39.39
28.22
42.24
HPAL Deliveries
8.19
8.33
12.03
18.72
16.72
20.55
Effective Ni Pay factor1Ore Exports
16.94%
25.18%
24.11%
18.02%
14.16%
17.14%
HPAL Deliveries
8.21%
8.33%
8.81%
9.63%
10.1%
9.63%
Dividend Yield2
2.4%
10.8%
8.2%
7.2%
N/A
N/A
Cash dividend payout ratio of PY earnings
32%
152%
151%
79%
N/A
N/A
Source: Company Data
Ni Pay factor is the ratio of revenue to LME price for each unit of contained nickel sold.
Dividend yield is computed as dividend per share divided by average NIKL price per share

Shipments And Revenues By Ore Type

Full-year Comparison

Revenue – Variance Analysis

Full-year Comparison

Net Income – Variance Analysis

First Semester Comparison

  • Reported attributable net income at P1.7 billion, down 56% YoY due to lower ore prices in 2Q-23 impacting both ore revenues and the profitability of our investments in the HPAL plants.

  • Excluding the company’s equity interest in the two HPAL projects, attributable net-income (net of minority interest) declined by 33% to P1.8 billion YoY due to lower nickel ore prices. Losses incurred by the HPAL plants were likewise due to lower YoY nickel and cobalt prices.

  • HPAL operations registered loss of P77M due to lower nickel and cobalt prices, as well as additional repairs and maintenance costs incurred.

Cost & Expenses – Variance Analysis

Full-year Comparison

Investment in HPAL Equity Earnings

Equity Earnings, in PHP Millions (1H-23 comparison)

  • The reduced Nickel and Cobalt prices had impacted Equity earnings from investments in the HPAL operations

JSI Financial Highlights (1H’2022 to 1H’2023)

1H’22
1H’23
YoY% change
Generation (in MWh)
49,554
76,375
54% ▲
Presently operating at 100MW vs 62 MW in previous year
Revenues (Php in millions)
216.29
390.63
81% ▲
Positive impact due to higher generation and WESM prices
EBITDA (Php in millions)
177.77
330.82
86% ▲
Within 80-85% target
NIAT (Php in millions)
47.57
56.45
19% ▲
Sustainable profitability for 100MW operations and favorable market conditions.
EBITDA Margin
82%
85%
300Tbps ▲
Within 80-85% target
Weighted Realized Tariff (in Php)
4.36
5.11
17% ▲
Tight supply in the Philippines driving prices higher
Source: Company Data