Costa Group has referenced a number of “significant challenges” when reporting its finical results for the 2019 calendar year (CY2019).
The diversified fresh produce business’ EBITDA-SL came in at A$98.3m, a reduction of 21.5 per cent on the A$125.2m it posted during the prior comparative period (CY2018).
The performance was in-line with an updated earnings guidance provided by the Australian-headquartered company in October 2019.
Costa Group CEO Harry Debney said the results reflected the impact of drought and weather events over the 12 month period.
“The second half of the year was particularly challenging, which impacted fruit sizing and yield in our late season citrus, berry and avocado crops,” Debney explained in a release issued to shareholders.
“We also had to take action to remove part of our berry crop at Corindi (New South Wales) due to a lack of rain in order to conserve our perennial blueberry footprint. Although our key berry and tomato growing locations at Corindi and Guyra have received heavy rainfall over January and into February, improving our overall and ongoing water security across the business will continue to be a key priority in recognition of the risks associated with weather and climate cycles.”
In a positive sign for the company, its CY2019 revenue topped A$1bn, up 5.8 per cent on CY2018 (A$990.3m). This growth was led by Costa Group’s new Colignan citrus farm sales and increased table grape marketing volume. Revenue from the company’s core produce segment came in at A$869.3m, up from A$824.1m in CY2018.
Costa Group closed CY2019 with a net debt of A$178.8m and leverage of 1.82x EBITDA-SL, which the company said was better than expected. A final dividend of A$0.02 per share was issued.
Looking ahead, Debney said the group was optimistic about its prospects.
“Despite recent challenges, the business fundamentals remain strong and initial trading into CY2020 has been positive,” he explained. “Pricing levels have improved considerably across most categories, particularly berries and mushrooms and the outlook for the upcoming Far North Queensland berry season is favourable.
“Early season performance from the international segment has also been positive. The impact from last year’s citrus hailstorm is expected to be at the higher end of previous estimates. In addition, early season yield estimates suggest a lighter crop, due to both density and sizing, however rainfall and moderating climate over the next few months may improve the situation.”
The impact on the company from the coronavirus outbreak is currently unknown, with peak volumes from its Chinese berry operation to be harvested from March.
“Subject to any impacts from the coronavirus, and allowing for the above impact from citrus, the balance of the portfolio is expected to perform in line with previous guidance for CY2020.”