Costa Group faced "significant challenges" in 2019
Australia's leading fruit and vegetable company Costa Group said it experienced "significant challenges" in its 2019 financial year, during which time its EBITDA-SL fell by 21.5% to A$98.3m.
The performance was in-line with an updated earnings guidance provided by Costa in October 2019.
The company's CEO Harry Debney said the challenges it had experienced were related to ongoing drought and weather events in the second half of the year.
"The second half of the year was particularly challenging, which impacted fruit sizing and yield in our late season citrus, berry and avocado crops," he said.
"We also had to take action to remove part of our berry crop at Corindi (New South Wales) due to a lack of rain in order to conserve our perennial blueberry footprint.
"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."
He added that Costa is committed to making its operations sustainable so they can better withstand environmental risks like extreme weather events in order to improve long-term profitability.
Despite the disappointing EBITDA-SL performance, Costa Group's revenue rose by 5.8% year-on-year. This was driven by the new Colignan citrus farm sales and increased table grape marketing volume
And despite recent challenges, Costa says the 'business fundamentals' remain strong and initial trading into CY2020 has been "positive".
Pricing levels have improved "considerably" across most categories, particularly berries and mushrooms and the outlook for the upcoming Far North Queensland berry season is favorable. Early season performance from the International segment has also been positive.
The impact from last year’s citrus hailstorm is expected to be at the higher end of previous estimates.
In addition, early-season yield estimates suggest a lighter crop, due to both density and sizing, but rainfall and moderating climate over the next few months may improve the situation.
The impact of the coronavirus outbreak is currently unknown with peak volumes in China to be harvested from March, it said.
Subject to any impacts from the coronavirus, and allowing for the above impact from citrus, the balance of the portfolio is expected to perform in line with previous guidance for CY2020.