Costa Group has upgraded its full-year profit forecast after oranges and tomatoes contributed to the fruit and vegetable grower’s first-half profit growth of 14.5 per cent.
Revenue for the six months to December 31 rose 10 per cent and its underlying profit hit $28.6 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 stand-out 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 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.
Its shares gained 62 cents, or 10 per cent, to $6.85, just shy of an all-time high.
The upgraded guidance 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 noted that central Queensland production for the most recent avocado season was about 40 per cent below expectations across the industry, and the West Australian crop was also lighter.
The company has agreed to buy another avocado farm on the NSW mid-north coast, which along with other recent acquisitions will mean Costa will produce and supply avocados from February through to December.
STRONG GROWTH FOR COSTA GROUP
* Half year net profit $66.2m v $15.9m
* Underlying profit up 14.5pct to $28.6m
* Revenue up 9.8pct to $489.4m
* Interim dividend up one cent to five cents, fully franked.