Costa Group grows first-half profit

Citrus and tomatoes were standouts as Costa Group lifted underlying first-half profit 14.5pc.

Costa Group CEO Harry Debney. Pic: Aaron Francis

Costa Group has lifted underlying first-half profit 14.5 per cent to $28.6 million after a near 10 per cent rise in revenue for the fruit and vegetable grower.

Revenue for the six months to December 31 has risen 9.8 per cent to $489.4 million, with chief executive Harry Debney calling out citrus and tomato as the strongest performing categories.

“These results are indicative of a strong 1H FY2018, with our citrus category continuing to make a standout contribution, fuelled by growing export demand across our key markets including Japan, USA and China,” Mr Debney said.

“Tomatoes also made an excellent contribution boosted by the snacking segment’s performance.”

Costa Group (CGC) said it now expects full-year underlying profit to grow by about 25 per cent, compared to previous guidance of at least 20 per cent. That includes a contribution from berry grower African Blue. Costa expanded its shareholding in African Blue during the period to 86 per cent in a $68.5 million deal that prompted the revaluation of the 49 per cent stake it already held.

A $40.1 million non-cash gain on the revaluation led to a more than fourfold increase in Costa’s net profit to $66.2 million.

Costa Group said full-year earnings will be weighted to the second half due to the timing of the avocado harvest, but it expects a minor hit in the subsequent six-month period due to hail damage at its central Queensland avocado farm. The company said hail stripped the young trees at its 38-hectare Kumbia farm, and that it would take approximately two years to regain full tree health.

Costa Group noted that central Queensland production for the most recent avocado season was about 40 per cent below expectations across the industry, and that the West Australian crop was also lighter.

The company raised its interim dividend by a cent to five cents, fully franked.

AAP