Forbes
Silver Wheaton will declare its annual and fourth quarter results this week. Last quarter, the company reported a 13% year-over-year increase in revenues to $161.3 million while net income declined by 11% year-over-year to $119.7 million. Although it reported a steep jump in production to 7.7 million equivalent ounces of silver due to the addition of production from Hudbay’s 777 mine, sales amounted to only 5.1 million ounces due to the timing of deliveries. Therefore, the sale of 2 million ounces of silver should be recognized in future quarters. We expect part of that to be reflected in sales for the fourth quarter, thus boosting the quantity of shipments in that period.
Any upside in the price of silver benefits Silver Wheaton which buys silver from mining companies at fixed prices under long-term contracts but sells it at market prices. Since average silver prices have been higher compared to the third quarter and sales are expected to be higher as mentioned above, we expect higher sequential revenues and profit margins in the fourth quarter. The reason for higher prices in the fourth quarter could have been investment demand driven by apprehensions over the fiscal cliff situation. Prices have moderated since then.