Nickel Industries (NIC) H1 2024 earnings summary

Executive summary

• Achieved 8.18 million man hours worked with only one LTI, maintaining world-class safety standards and top ESG ratings, including the highest MSCI ESG rating for an Indonesian mining company and multiple sector awards.

• Sales revenue for 1H 2024 was US$843.3M, down 9.5% year-over-year, with gross profit of US$96.3M and EBITDA of US$131.7M, reflecting a challenging nickel price environment and operational disruptions.

• Net profit after tax declined 71% to US$14.0M, impacted by lower nickel prices and operational issues.

• Interim dividend of A$0.025 per share declared, a 25% increase from 1H 2023, funded from conduit foreign income and representing ~65% payout of 1H free cash flow.

• Increased equity interest in ENC/EMC HPAL project to 44% through significant capital outlays, supporting project acceleration.

Financial highlights

• RKEF EBITDA dropped 38.2% to US$90.9M, while mine EBITDA rose nearly 50% to US$39.1M.

• Nickel production reached 63,814 tonnes from RKEF and 4,117 tonnes from HPAL operations.

• Weighted average contract price for nickel fell 27% year-over-year, but cash costs declined from US$12,800 to US$9,700 per ton.

• Group EBITDA margin for 1H 2024 was 15.6%.

• Net debt as of June 30, 2024, was US$402.3M (debt US$753.8M, cash US$351.5M).

Outlook and guidance

• Management expects improved ore haulage and production in the second half, targeting 12M wmt mined at Hengjaya Mine for 2024.

• ENC/EMC HPAL project construction is progressing, with key equipment arriving from mid-September and commissioning expected by end of next year.

• Ongoing focus on operational improvements, ESG leadership, and further investments in sustainability and community initiatives.

• Market conditions remain challenging due to increased Indonesian supply and slower EV demand growth, impacting nickel prices.