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What Analysts Expect for Century Aluminum’s 4Q16 Revenue

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Century Aluminum’s 4Q16 revenue estimates

According to data compiled by Thomson Reuters, analysts expect Century Aluminum (CENX) to post revenue of $346 million in 4Q16 and $371 million in 1Q17.

In contrast, Century Aluminum posted revenue of nearly $383 million in 4Q15 and $333 million in 3Q16. Analysts expect Century Aluminum’s 4Q16 revenue to fall on a yearly basis and to rise on a sequential basis.

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Shipments

Revenues of commodity companies (XME) such as Rio Tinto (RIO) and Norsk Hydro (NHYDY) are functions of commodity prices and shipments. Revenues of US-based aluminum producers, including Century Aluminum and Alcoa (AA), have been impacted negatively in recent quarters due to lower shipments.

Both Century and Alcoa have closed their high-cost smelters in bids to remain competitive in the current price environment. Lower year-over-year aluminum shipments will likely drag Century Aluminum’s 4Q16 revenue.

Aluminum prices

While fewer aluminum shipments could be negative for Century Aluminum’s 4Q16 revenue, higher aluminum prices are expected to offset some of the impact. Aluminum prices rose sharply in 4Q16, averaging $1,709 per metric ton. To put this in context, aluminum prices averaged $1,633 per metric ton in 3Q16 and $1,507 per metric ton in 4Q15.

It’s important to note that the full impact of higher aluminum prices should be visible in Century Aluminum’s 1Q17 financial results due to the impact of lag pricing.

Meanwhile, while higher aluminum prices will likely support Century Aluminum’s 4Q16 profits, rising raw materials costs could be a drag. We’ll discuss this more in the next article.

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