My understanding is they usually buy raw materials and packaging materials a quarter in advance.
WMP spiked in the 2 March 2021 auction. As such, we could probably assume one third of the proportion of WMP raw ingredients for the quarter cost 40% more!
If we assume 2/3 (?) of their PMOC is WMP, then that means about $8.5m was for WMP.
If we then assume that one third of this (March purchases) had to be purchased at a premium of 40% then they had to pay an additional $1m for the quarter that we have not yet recovered at a higher sales price!
Jan - $2.5m
Feb - $2.5m
Mar - $3.5m ($2.5 + 40%)
This is $1m that should be taken straight off the $3m cash burn due to timing.
I pointed out in an earlier post that some $1.3m (call it $1.1m due to margin) would relate to timing on the Coles deal - produced ready for stocking but not shipped (invoiced to Coles) yet.
Just these two items - WMP price increase and the Coles timing could easily account for $2m+ of the $3m “unexpected” cash burn for Q4.
Take out the $1m additional one-off staff costs and there you go: Without non recurring one-offs and timing of the above mentioned items KTD would have been close to, or just, CFP this quarter.
I’ll be buying more on Monday.
Hope this helps.
TT
KTD Price at posting:
16.0¢ Sentiment: Hold Disclosure: Held
My understanding is they usually buy raw materials and packaging materials a quarter in advance.
