The share price of Australia-based Costa Group fell by 39% on Thursday after the company said that sales of some commodities over recent weeks have been lower than forecast.
It told investors to expect “largely flat growth” in net profit after tax for the 12 months ended June 2019 due to “subdued demand” for tomatoes, berries and avocados in December and January.
“This patchy demand has been reflected in reduced pricing for a number of product lines. The citrus ‘off season’ which reflects the biennial nature of this crop also finished earlier than expected,” it said.
The company’s share price fell AUD$7.37 to AUD$4.51 over the course of Thursday’s trade.
“If current trading conditions continue, this, together with short term slippage of the commissioning of the Monarto mushroom facility upgrade in South Australia and the previously announced additional costs from investments such as African Blue, is expected to result in largely flat growth for the twelve month NPAT-S to the end of June 2019 compared to the prior year,” it said.
“This compares to our previous forecast of low double digit growth for that period.”
It added that it does not view the immediate issues as structural and regards the conditions as a cyclic situation. It also noted that ongoing growth plans across the categories continue to track well.