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John,
It’s a business with a travelling sales team. That sales team are highly qualified professional agronomists who aren’t going to sleep in their cars and eat spam fritters. Once we hit capacity those expenses will naturally tail off.
Heyup everyone. All a bit glum on here. Suggest we all stop guessing and just ask the questions on the 6th at 9am. https://www.investormeetcompany.com/
Even if you can’t make it, post your questions on there and you can listen back later for the answers. Worked really well last time. Very informative.
Sussex…. If Q2 had been 689% up we’d have sold out the mine capacity half way through the year, have a massive backlog of orders and angry customers. Investors would all complain that the product was being sold too cheaply. The sales team would be turning people away and the production contractors and drivers would all be wanting overtime.
Instead we’ll sell out capacity steadily, flattening the production bell curve, all at an increased price to happy customers who’ll return next year with their friends.
Some buyers are very lucky to be getting in at these levels. It’s a shame people like SOYO have sold today on sentiment. Anyone that has been in since 4p would know the risks and rewards of this company. I trust the board and know they’ve enough skin in the game to not dilute us. That alone is fantastic but add the fact that there’s negligible risk…. but everyone has different views. Mine is simple… but as much as I can whenever I can.
Down to Earth,
There was a change in accounting process at the end of 2021 which effectively meant sales carried over to Q1 2022. There has since been two price rises to increase the bottom line. Traditionally, the buying period has been in the second half of the year. I don’t see a problem meeting the sales target… it’s the profit that counts
As I tried to mention below the balance of price Vs sales Vs growth is key. If they’d sold all of the calendar years production in Q2 for a cheap price shareholders would be livid. If they’d hiked the price and not sold anything… same again. The current installation has a production capacity of c200KT. They’ve a target of 150KT for this year which is way better than originally programmed due to macro events. What’s important is balancing price sales and production to maximise profit and retain customers
Last year the Q2 sales figures were RNSd on 29th June. I think they’ll put out the figures tomorrow to allow the market to digest them over the weekend. A considered response and gradual re-rate is on the cards here…. Much more preferable than a spike. Mike, I’d be happy with a total for Q2 of 50KT. That would ensure that we have a steady order book and still meet our annual target.
I think that ultimately what’s critical is building a loyal client base. If that means selling at 250BRL for a few years to motivate than to change their ways then it’s worth it. Ultimately in 5 years time when I retire this will be multiples of today and paying dividends.
If you remember way way back, the pricing structure was originally set up to track $50 USD per tonne. Back then it was 210 BRL. Production cost when they reach 400KT was touted at $7 USD.
To my knowledge there’s never been a price per tonne conveyed to shareholders since then, however the strategy was to link to the USD which would keep it in line with the imports. A Move back to $50USD would be 260 BRL. However, since then the imported fertiliser cost has almost tripled. I wouldn’t be surprised to see 350 BRL per tonne and much much higher for the small bags.