Why did Largo's operating profit plummet in Q4 2024?

Largo's operating profit plummeted to -$19.29 million in Q4 2024 due to a combination of declining revenues and increased costs:

1. Revenue Decline: The company's annual revenues dropped by 37% to $124.9 million. This decline is primarily attributed to lower vanadium prices, especially in European and Chinese markets, and production challenges due to maintenance shutdowns. The decrease in revenue per pound sold from $7.69 in Q4 2023 to $5.70 in Q4 2024 also contributed to the revenue decline.
2. Cost Increase: Despite the revenue challenges, Largo managed to reduce operating costs by 17% through strategic cost-cutting measures. However, the company faced increased costs, which, combined with the revenue decline, led to a significant decrease in operating profit. The adjusted cash operating costs excluding royalties per pound1 of $3.05 in Q4 2024, although a 39% reduction from Q4 2023, highlighted the ongoing cost management efforts.

In summary, Largo's operating profit plummeted in Q4 2024 due to a 37% decline in annual revenues, primarily caused by decreased vanadium prices and production challenges, along with increased costs despite successful cost-cutting measures.

LGO Operating Income YoY, Operating Income