Costa Group citrus offsets low berries
STRONG citrus and avocado sales have helped Australia’s biggest fruit and vegetable grower Costa Group offset a significantly reduced berry crop in Morocco that was stunted by a cold northern hemisphere spring and early summer.
Shares in the Australian Securities Exchange-listed company, founded by well-known Geelong businessman Frank Costa and his brother Adrian, dived 20 per cent on Friday to $4.82 after Costa Group posted its annual results for the year ending June 30, the company forecasting low double-digit growth during the next five years.
Sales rose 10.2 per cent to $1.002 billion, with the most significant revenue growth underpinned by an “excellent” citrus crop and strong demand for navel oranges and seedless mandarins in Asia and the US.
The crop size was aided by timing, as last year was an “on-year crop” for the fruit, which follows a pattern of biennial high and low crops. The company’s mushroom and avocado divisions also performed above expectations.
Net profit after tax was up 26.3 per cent to $76.69 million, while earnings before interest, tax, depreciation, amortisation and material items lifted 30.9 per cent to $76.7 million.
In November, the company raised its stake in Moroccan blueberry business African Blue from 49 per cent to 86 per cent, giving it majority control of the business.
However, the timing was inopportune with the Moroccan harvest delayed by almost eight weeks, reducing the overall yield 10 per cent below expectations and resulting in a high proportion of lower-grade berries.
The increased ownership, however, contributed to a boost in overall revenue.
Costa Group chief executive Harry Debney said strong performances from the company’s citrus, mushroom and tomato categories countered the materially lower than expected contribution from African Blue.
“The citrus category had a standout performance, boosted by excellent crop quality and strong export demand, while mushrooms and tomatoes also performed well, with results exceeding targets,” Mr Debney said.
Costa declared a final dividend of 8.5 cents a share, bringing the total dividend payment for the 2018 financial year to 13.5 cents a share, an increase of 22.7 per cent from the previous year.