Wheaton Precious Metals’ Q2 2017 Earnings Preview: Year-Over-Year Stability In Precious Metal Prices To Be Reflected In Results

August 9th, 2017 by Trefis Team
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Wheaton Precious Metals

Wheaton Precious Metals is set to release its second quarter earnings result on August 10 and conduct a conference call with analysts the next day. [1] We expect the company’s Q2 2017 earnings to remain at levels similar to those reported in the corresponding period of last year, given that precious metal prices have largely remained unchanged year-over-year.

Given the improved economic conditions this year, the safe-haven investment demand for precious metals has waned, as indicated by the  34% year-over-year decline in the Q2 2017 investment demand for gold reported by the World Gold Council. [2] However, the decline in the investment demand for precious metals has been partially offset by the increase in jewelry demand, particularly from India. In addition, in the case of gold, a constriction in the supply of recycled gold has helped offset the impact of lower demand on prices. In the case of silver, improved global economic conditions this year, including a fiscal stimulus fueled Chinese economy, have supported the industrial demand for the metal, offsetting the impact of lower investment and jewelry demand on prices.

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Besides the company management’s commentary on the likelihood of any new streaming deals, we will be looking out for updates regarding the status of the company’s tax dispute with the Canadian Revenue Agency (CRA) during the earnings conference call. The CRA reassessed the taxes on the income earned by Wheaton Precious Metals’ foreign subsidiaries for the years 2005-2010 in 2015, arguing that this income should be subject to taxes in Canada. [3] Furthermore, the CRA is also conducting an audit of Wheaton Precious Metals’ international transactions for the years 2011-2013. [3] Most of Wheaton Precious Metals’ income generating activities are conducted by its subsidiary, Silver Wheaton (Caymans) Ltd, which is subject to the income tax jurisdiction of the Cayman Islands and hence does not pay income tax. [3] Though Wheaton Precious Metals is contesting the CRA’s position, the regulatory authority’s stance vis-a-vis the company’s international operations remains a source of uncertainty surrounding its business. A favorable resolution of the matter would certainly boost the company’s prospects going forward. We will be looking out for any material developments regarding the dispute with the CRA in the earnings conference call.

Have more questions about Wheaton Precious Metals? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Wheaton Precious Metals

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Notes:
  1. Wheaton Precious Metals To Release 2017 Second Quarter Results On August 10, 2017, Wheaton Precious Metals New Release [↩]
  2. Gold Demand Trends Q2 2017, Kitco [↩]
  3. Wheaton Precious Metals’ Q3 2016 Earnings Release, SEC [↩] [↩] [↩]