Costa shares plunge on sudden exit of CEO Sean Hallahan

Sean Hallahan, who was appointed CEO in March last year, gave no clear reason for his decision to leave the company.

Costa Group has flagged challenges related to its citrus outlook.

Shares in Australia’s biggest fruit and vegetable wholesaler Costa plunged more than 14 per cent following the sudden exit of chief executive Sean Hallahan.

No clear reason was provided but Mr Hallahan, who was appointed CEO in March last year, said “reaching my decision has been a process and there are several things that have gone into my decision”.

“It has been an intense couple of years in agriculture made even more challenging with the overlay of the Covid-19 pandemic.”

He will support the transition plan to interim chief executive Harry Debney for a short handover period, anticipated to conclude in mid October.

Costa chairman Neil Chatfield said Sean’s five years with the organisation, including as chief operating officer, played a pivotal role in Costa’s development and growth.

“We understand that the last two years, particularly in Victoria, have taken a large toll on the business and personal lives of individuals.”

The company will undertake a search for a new CEO and said it will update the market as appropriate.

Its shares slid 14.2 per cent on the news, to close at $2.18, giving it a market capitalisation of $1.01bn. That represents a fall of 45 per cent from its April high of $3.44.

But Wilsons equity analysts retained their overweight rating on the stock, with a 12-month target price of $3.17 per share.

“In our view, Harry Debney is well positioned to lead the company while the search for a replacement is underway,” the analysts said in a note.

Costa group, which has flagged challenges related to its citrus outlook, booked a first-half net profit after tax of $37.8m.

Its winter citrus crop was hit by east coast storms which hurt the quality of some navel orange crops, particularly in the Sunraysia area, lowering pack-out rates and hurting Costa’s ability to take advantage of strong pricing and demand.

Like many operators in the sectors, the horticulture group has also struggled during two years of border closures which prevented overseas backpackers from picking fruit, exacerbating a tight labour market.

During its peak harvest period, Costa normally employs about 1300 workers in its citrus growing areas along the Murray River.

Costa listed on the ASX in 2015, pitching itself to investors as an industrial technology company rather than an agricultural business, highlighting its protected cropping model. This involves moving plantings away from the paddock and into sheltered areas.