Century Aluminum’s Key Strategic Priorities
There are certain risks specific to Century Aluminum (CENX). There are certain strategic priorities that Century Aluminum’s management needs to address.
Most aluminum companies closed the year with decent gains on the stock markets. Century Aluminum (CENX) delivered ~135% returns on Wall Street.
The valuation of any enterprise is a function of its growth opportunities and the risk associated with the business. Aluminum demand is expected to be higher in 2015.
Century Aluminum’s (CENX) working capital requirements were reduced in 4Q14. However, its working capital might come down more in 1Q15.
Century Aluminum had a capex of $56 million in 2014. It has a capex budget of ~$80 million for this year. Its maintenance capex is expected to be $20–$25 million.
For Century Aluminum’s fourth quarter cash flows, the biggest contributor was its earnings. Its adjusted EBITDA was $92 million in the fourth quarter.
Working capital management had a positive impact of $10 million on Century Aluminum’s (CENX) fourth quarter cash flows.
A shift to value-added products also helped enhance Century Aluminum’s profit margins. An increase in its profit margins is a positive sign for its investors.
For Century Aluminum’s (CENX) 2015 product mix, it expects to get more than half of its revenue from non-standard grade aluminum products.
Century Aluminum’s plants in Helguvik and Ravenswood are idled. It hasn’t been able to secure power supply contracts.
Century Aluminum (CENX) has a series of power supply agreements. At the Hawesville plant, Century Aluminum purchases electricity at market-based pricing.
Prices for fossil fuels came down. This reduced the input costs for power producers. Lower crude oil prices also impact electricity prices.
Century Aluminum’s shipments increased in the fourth quarter. It was mainly due to the acquisition of stake in the Mt. Holly smelter.
Century Aluminum posted an adjusted EPS of $0.65 in the fourth quarter. Its EPS was $0.52 in 3Q14. The earnings were lower than Wall Street’s expectations.
Century Aluminum has an operation in Mt. Holly, South Carolina. It’s the most recent smelter in the US. Recently, Century acquired Alcoa’s stake in this plant.
Century Aluminum (CENX) posted its 4Q14 financial results on February 24 after the market closed. The earnings came in lower than analysts’ expectations.
By tracking the Shanghai Gold Exchange withdrawals, investors can get a good picture of the short-term direction for demand in China.
Tracked by the Federal Reserve, the weekly US Dollar Index measures the value of the dollar compared to the currencies of its significant trading partners.
The outlook on gold is mixed right now. Uncertainty and fear in the rest of the world, especially Europe, is leading investors toward gold.
As long as the Fed doesn’t reach its PCE target of 2% core inflation, it’s likely to let the inflation rate run. This will support gold prices.
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