Australian fresh fruit and vegetable supplier Costa Group Holdings has cut its full-year earnings guidance on the back of subdued demand for tomatoes, berries and avocados during December.
The Sydney-listed firm said those factors have so far spilled over into January, resulting in slower-than-expected trading conditions, according to a statement filed with the Australian Securities Exchange today (10 January). The stock price closed down more than 38% following the profit warning.
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Net profit after tax (NPAT-S) is now predicted to be flat for the reporting period ending in June, compared to a previous estimate of low double-digit growth. The company said it will provide a further update on the outlook in February.
“This patchy demand has been reflected in reduced pricing for a number of product lines,” Costa added. “The citrus ‘off season’, which reflects the biennial nature of this crop, also finished earlier than expected.”
However, Costa noted it considers the current trading conditions to be cyclical, and is sticking with its previously announced guidance for the fiscal 2019 year for double-digit growth in the compound annual growth rate. The company added that its on-going growth plans remain on course.
Costa is also basing its new forecast for the current financial year on what it said is “slippage” related to the commissioning of its Monarto mushroom facility upgrade in South Australia, and the previously announced additional costs from investments such as African Blue.
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By GlobalDataThe company said in 2017 that it had acquired an additional 41% stake in Morocco-based blueberry grower African Blue, giving it a controlling interest of 90%. And in May 2017, Costa announced it planned to increase investment in the Monarto site to meet growing demand, with a target to double production output.
Costa’s revenues exceeded AUD1bn (US$718.1m at today’s rate)) last year for the first time, posting growth a tad over 10%. NPAT-S, or net profit after tax and before self-generating and re-generating assets (SGARA), grew 18.2% to AUD76.6m.
