Sherritt International ((TSE:S)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Sherritt International Reports Robust Performance Amid Challenging Market Conditions
The recent earnings call for Sherritt International highlighted a robust operational performance and strategic management despite challenging market conditions. The company celebrated significant achievements in sales and cost reductions, while also addressing the ongoing challenges posed by low nickel and cobalt prices and external factors in Cuba.
Significant Increase in Nickel Sales
Sherritt International reported a notable 22% increase in full-year 2024 nickel sales. This impressive growth underscores the success of the company’s marketing strategies and spot sales, which have effectively navigated the current market landscape.
Cost Reductions and Operational Efficiency
The company achieved an 18% reduction in net direct cash cost (NDCC) compared to the previous year. This reduction reflects Sherritt’s commitment to strategic cost management, even in the face of reduced cobalt byproduct credits.
Moa Joint Venture Expansion Progress
Progress on the Moa Joint Venture expansion is advancing well, with Phase 2 nearing completion. The commissioning and ramp-up are scheduled for this year, poised to enhance Sherritt’s production capacity.
Six-Year High in Electricity Production
The power segment of Sherritt International reached a six-year high in electricity production. This achievement was driven by operational improvements and an increased gas supply, marking a significant milestone for the company.
Increased Dividends from Energas
Energas dividends increased to $13 million in 2024, with expectations of doubling in 2025. This growth underlines Energas’ strong contribution to Sherritt’s financial performance.
Challenging Market Conditions for Nickel and Cobalt
Nickel and cobalt prices are currently at their lowest in years, with nickel prices hitting a four-year low and cobalt reaching its lowest in nearly a decade. These market conditions present ongoing challenges for Sherritt.
External Challenges in Cuba
Sherritt’s operations in Cuba faced significant external challenges, including nationwide power outages, earthquakes, hurricanes, and heavy rains, impacting their production capabilities.
Lower Cobalt Byproduct Credits
The company experienced reduced cobalt byproduct credits due to lower average realized prices, affecting their NDCC negatively.
Impairment and Rehabilitation Costs
Sherritt recorded an $8.4 million non-cash impairment of intangible assets in oil and gas and a $6.9 million non-cash loss on rehabilitation provisions, impacting their financial statements.
Forward-Looking Guidance
Sherritt International provided optimistic forward-looking guidance for 2025, anticipating increased nickel and cobalt production, notably in the latter half of the year. They plan to maintain their NDCC consistent with 2024, despite anticipated higher input costs. Dividends from Energas are projected to significantly increase to between $25 million and $30 million. Moreover, investment in the Moa Joint Venture’s tailings project is expected to continue, with a new facility scheduled for 2026 to bolster the Moa mine’s long-term viability.
In conclusion, Sherritt International’s earnings call highlighted a resilient operational performance amidst challenging market conditions. The company demonstrated effective strategic management through significant sales increases and cost reductions, while also preparing for future growth with strategic initiatives and expansions. Despite facing market and external challenges, Sherritt remains committed to its long-term growth plans.
