The Costa Group Holdings Limited (ASX: CGC) share price will be on watch on when trading opens this morning, following the release of its results for the full year ended 31 December 2019.
What did Costa Group report?
Costa Group recorded revenue of $1,048 million for calendar year 2019, which was an increase of 5.8 % on the prior year (CY2018). The company noted that this growth in revenue was led by its new Colignan citrus farm sales, as well as increased table grape marketing volume.
EBITDA for the Group came in at $98.3 million which was a significant reduction of 21.5% on the prior 2018 year. Costa Group recorded NPAT of $28.4 million, while statutory NPAT came in at a $33.8 million loss. Net debt for the Group was $178.8 million.
Costa Group declared a final dividend of 2 cents per share. This brought the total dividend payment for CY2019 for the company to 5.5 cents, fully franked.
High Impact of Drought and Adverse weather conditions
Costa Group commented that unfortunately, drought conditions reduced its fruit sizing and yield in the late season citrus, berry and avocado crops over the second half of 2019. In particular, the group noted the impact of the drought over the past few years on tomato and berry categories became more pronounced in the second half of 2019.
In addition, a higher a water expense was incurred and alternative water sourcing arrangements were required to be deployed at its operations at Guyra and Corindi.
During the extensive bush fire emergency in early January, Costa Group noted that one of its two small Tumbarumba blueberry farms in New South Wales suffered fire damage to its insured packing and machinery infrastructure.
The group further commented that the impact from the hailstorm last November 2019 on its citrus crop is expected to be at the higher end of previous estimates. However pleasingly, the Group noted that pricing levels improved considerably during January in most categories, particularly berries and mushrooms.
Costa Group CEO Harry Debney commented that the company had faced significant challenges during, relating to drought and weather events in the second half of the year, however, noted improvements during January and February.
"Although our key berry and tomato growing locations at Corindi and Guyra have received heavy rainfall over January and into February, improving our overall and ongoing water security across the business will continue to be a key priority in recognition of the risks associated with weather and climate cycles."
Outlook for the remainder of FY20
Costa Group noted that pricing levels so far in 2020, have improved considerably across most categories, particularly berries and mushrooms and the Group reported that the outlook for the upcoming Far North Queensland berry season is favourable.
The impact from last year's citrus hailstorm is expected to be at the higher end of previous estimates and the impact from the Coronavirus outbreak is currently unknown.
Costa Group added it anticipates that the balance of the portfolio is expected to perform in line with previous guidance for CY2020.
