Costa Group, the Australia-listed fruit and vegetable supplier, has slashed its earnings outlook following “unprecedented” volatility across its business.

Australia’s largest horticultural company said it experienced variable harvest yields in Morocco, while mushroom output was affected by unseasonably hot weather conditions in its domestic market, among a host of other factors. 

Company chairman Neil Chatfield announced the cut in the full-year outlook late yesterday (29 May) at Costa’s annual general meeting. Net profit after tax (NPAT-SL) is now seen in a range of AUD57m (US$39.4m) to AUD66m. In February, Costa said the same metric would show growth of at least 30% from AUD56.6m recorded in 2018. That would have put the figure around the AUD74m mark, meaning the magnitude of the cut is in the region of 10-22%.

At the same time, EBITDA is seen at AUD140-153m, compared to last year’s pro-forma result of AUD125m.

Costa’s shares closed down almost 28% on the Australian Securities Exchange today (30 May) after the profit update.

“As we have worked through May, we are facing a deteriorating operating environment on a number of fronts, which taken collectively, are likely to impact the (calendar) full-year results,” Costa said in a statement. “The combined impact of these recently emerging factors suggest that the full calendar year results will be above the prior year but below our earlier expectations.” 

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Separately, it emerged Costa acquired Nangiloc Colignan Farms (NCF) at the end of last year for an undisclosed sum. The deal for Nangiloc Colignan, based in the Sunraysia growing region of north western Victoria, was conducted in conjunction with CK Life Sciences.

CK Life Sciences – an investor focused on agriculture-related products, nutraceuticals, and pharmaceuticals – purchased the farm and is leasing it to Costa over a 20-year period. NCF produces various citrus fruits, including mandarins and oranges, as well as grapes.

Chief executive Harry Debney said when the deal was announced that NCF will “reduce reliance on any one region in our portfolio and will also open up additional growth opportunities”. He added: “In particular, with respect to Afourer mandarins and navel oranges this will allow us to further take advantage of export market demand.”