Plant shutdown29 Aug 2018 13:53
Personally I wouldn't advise anyone gets overly concerned with the industrial action/protest plant shutdowns in the RNS at this time in terms of impact to production.
If we take the original figure of 3750 tonnes and divide it over Ophidians working days figure of 80 days per quarter, that's 320 days total which means the average daily production over the year would be 11.72mtv per day (to 2 decimal places).
A 2.5 day industrial action where we know the plant was totally shutdown for that period is therefore lost production of 29.3mtv - quote from RNS "During June 2018, the operation experienced two and a half days of unprotected industrial action, resulting in no production being achieved out of the plant during that period. The matter was fully resolved on the third day of the industrial action and all labour commenced work immediately thereafter"
A 4 day community protest where we assume the plant was totally shutdown for that period is therefore lost production of 4*11.72 or 46.88mtv. However I would say it was unlikely that the plant was totally shutdown due to a local community protest. More likely production was only reduced on those days. Indeed the RNS makes no mention of total shutdown, stating "During the course of Q3, Vametco experienced further production interruptions due to a protest by members of the local community"
However for the purposes of worst case scenario, let's assume that the plant was totally shutdown for those 6.5 days. That means lost production of 76.18 mtv, let's say 76mtv. That's the kind of figure that is kept in stock and shouldn't have affected any sales at all.
The production guidance has been reduced to between 2,850 and 3,000mtv. I am going to assume a midpoint of 2,925mtv.
That means due to industrial action, maintenance, plant part replacement, expansion programme works etc lost production is estimated to be 3750 - 2925 = 825mtv.
We know that plant impacts from industrial action and community protest worst case scenario led to lost production of up to 76mtv. That means only 9.2% of lost production was due to those actions, so over 90% of lost planned production is down to items within the control of the company - and as the RNS states "The constraints experienced in H1 2018 are well understood by our management team and are being addressed accordingly. Consequently, the Company expects to see production rates increasing towards the annualised production rate of 3,750mtV in the coming months."
Personally, disappointed as I was with the RNS, my disappointment was more at the lack of communication of price sensitive information than it was at the actual content. Clearly even with these issues, production remains on track to be higher than the previous year and we will shortly post our first ever profit.
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