Significant cost reduction? When? Since Daniel Tellechea became the interim CEO of Largo he keeps talking about the focus on the effort to reduce costs in a way to make a difference. With regard to the costs of revenue, not much happened in Q3-23 at all. The costs of revenues are costs associated with sales. Cost of revenue is the total cost incurred to produce and sell a good. It includes the COGS / cost of production / cost of distribution and other costs that are needed to deliver / sell a product.
Q3-23 Net Loss after tax way below expectation while Q3-23 Sales met expectations.
Analyst Revenue consensus = US$43.3M
Actuals Revenue = US$43.9M
Q3-23 Net Loss after tax = way below expectation.
Analyst Net Loss consensus = (US$0.05) / share
Actuals Net Loss = (US$0.19) / share
Our revenue met expectations but our losses were about 4 times higher than expected.
An indication that the Q3 disaster was not due to sales but caused by out-of-control costs instead.
The following speaks volume about management failure to control costs in Q3-23
| Item | Q2-23 | Q3-23 | Increase or (decrease) from Q2 to Q3 | % Increase or (Decrease) from Q2 to Q3 |
| Sales | US$53.1 | US$44M | (US$9.1M) | (17%) |
| Costs of Revenue | US$36M | US$35.5 | (US$0.5M) | (1.4%) |
In Q3-23 Largo incurred about the same costs of revenue to deliver 17% less in sales than the previous Q. Management needs to clearly prove that they can deliver on the promise of significant cost reductions..
DYODD