Operational Performance Clipper2 wrote:
They should stay with what they know best. (V. Production).
In the past Production was the only key indicator to gauge Largo’s operational performance. Production Results were measured against the pre-established / published Production Targets on a quarterly / annual basis. No Sales Target was required because Glencore was obligated under the take-or-pay offtake agreement to purchase all V products from Maracas.
With the newly acquired commercial independence Sales Targets are as important as Production Targets to determine the company’s operational performance. Sales Results must be measured against pre-established / published Sales Targets on a quarterly / annual basis. Management can not use the timing gap caused by the fact that “revenue is recognized only at time of delivery” as an excuse to not reveal its sales performance vis-a-visits sales targets to the stakeholders. “Sales” and “Revenue” are two different things because of the timing gap. In addition to Production we also need to know the following on a quarterly / annual basis:
What are the prescribed Sales Targets?
Do the Sales Results meet/not meet / exceed the Sales Targets?
And Why?
Q3 will be the first Q of full commercial independence. With revenue recognition lacking 2-3 months behind how can we know about the company’s performance vis-a-vis its own sales expectation for the Q? Behind by how many Tons? Ahead by how many? Actually we don’t even know the sales target for the Q, do we?