Positive outlook for Australian-headquartered fresh produce company as weather improves
Costa Group’s interim chief executive Harry Debney says the Australian fresh produce heavyweight has “a lot to look forward to”.
In his trading update and outlook to shareholders at the company’s annual general meeting (AGM) today (25 May), Debney said easing production costs and a more promising weather forecast would hold the company in good stead.
“The challenging weather impact from three consecutive La Nina events is now behind us going forward, with La Nina exhausted in Australia by the end of March,” Debney said.
“The return to warmer temperatures, higher light levels and lower rainfall across our major growing regions is a positive for our farming operations, both our protected and unprotected crops.”
Debney said input costs, which peaked at historically-high levels in 2021 and 2022, were slowly easing, while labour availability was improving.
“Closing of Australian borders caused serious labour shortages and constraints on the free movement of labour during the Covid pandemic,” Debney explained. “We are now in a much-improved situation and have seen improvement in labour availability with backpacker numbers returning to normal and continued access to Pacific seasonal labour, although not yet optimised.”
Discussing Costa’s product categories, Debney said the company’s citrus season was around three weeks behind traditional start dates, with its earliest growing region, 2PH in Emerald (Queensland), commencing harvest in May. Despite the late start, Debney said the outlook for the northern 2PH operations was “very positive relative to the prior year”.
While it was too early to make an assessment on Costa’s southern citrus season – which encompasses production in the Riverland and Sunraysia regions – Debney said the company wasn’t observing any major issues with Albedo, which had a significant impact on southern production in 2022.
Costa’s berry category is now transitioning to the Far-North Queensland season, where quality and pricing are said to be favourable. It comes after a challenging campaign with fruit from the island state of Tasmania. “Our farms [in Tasmania] performed well but crop timing and competitive volumes pushed prices lower,” Debney said.
The company’s tomato category also experienced lower-than-expected pricing and demand over the summer period.
Debney said Costa’s mushroom category was benefiting from increased yields from its Monarto site in South Australia, while its avocado category was performing “significantly better” than last year (2022).
Debney was appointed Costa’s interim chief executive in late 2022, following the departure of Sean Hallahan. Costa Group chairman Neil Chatfield said the company was “well progressed” in its search for a new chief executive.
Chatfield shared Debney’s positive outlook for the company.
“Whilst we are early in the 2023 year, consistent with our outlook statement accompanying our full year 2022 results announced to the ASX [Australian Securities Exchange] in February, we are seeing generally improved growing conditions and remain positive about the future.”