The Costa Group Holdings Ltd (ASX: CGC) the share price was a strong return yesterday, closing the day up almost 8% to $ 3.79.
It seems that some investors were confident that the horticulture company would produce a strong half-year result today.
Did Costa meet expectations?
For the six months to June 30, Costa increased its revenue by 11.8% compared to the previous period of $ 573 million.
However, EBITDA before SGARA, leasing goods and materials (EBITDA-SL) fell 8.4% to $ 82.4 million and after-tax net profit fell 15% to $ 41.1 million. The latter included material elements and depreciation of intangible assets related to the acquisition of African Blue.
Management has informed that the adverse conditions during the Moroccan blueberry season, the low demand for mushrooms, the quality of raspberries and the impact of the cost of citrus fruit and fruit fly water have weighed on its performance in the first half.
Nevertheless, Costa is recording a trend substantially in line with the lower end of the revised range of objectives outlined during the annual general assembly. As a result, it declared a free dividend of 3.5 cents per share. This has a record date of 12 September and a payment date of 3 October.
Costa Group CEO Harry Debney said: "We faced a series of challenges during CY2019, including adverse conditions during the Moroccan blueberry season, low demand for mushrooms, variable raspberry quality, costs of water and fruit fly affecting the citrus fruit category. All these occurrences have caused a difficult period. "
He informed that the company is focusing on the mitigation of the challenges it had to face in CY2019 and is strongly focused on the main commercial initiatives to guarantee a strong delivery in the period 2020-2022.
"The company has a series of initiatives in all our categories that are very focused on improving our performance and profitability. This includes the expansion of our varietal berry breeding program – both subtropical and tropical, commercial plantations of new citrus varieties and testing of trellised and protected high density avocado crops, "said Debney.
However, although his results so far are in line with the lower end of his recent guide, he warned that "trading and forecasting remain difficult with a potential further downside risk" due to the "continuing decline in commodity prices". less than expected mushrooms, the raspberry crumble is proving to be more significant and take time to mitigate, and a potential pressure on blueberry prices due to the NNSW blueberry sector's harvest significantly higher than expected. "
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Heterogeneous collaborator James Mickleboro has no position in any of the stocks mentioned. Motley Fool Australia owns shares and recommended COSTA GRP FPO. All of us fools may not all have the same opinions, but we all believe that considering a wide range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains only general investment recommendations (based on AFSL 400691). Authorized by Scott Phillips.
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