Insights

Costa (ASX:CGC) share price falls 4% after reporting modest first half growth

Costa shares are falling on Thursday after the release of its half year results…
The post Costa (ASX:CGC) share price falls 4% after reporting modest first half growth appeared first on The Motley Fool Australia. –

The Costa Group Holdings Ltd (ASX: CGC) share price is tumbling lower following the release of its half year results.

At the time of writing, the horticulture company’s shares are down 4% to $3.25.

Costa share price falls after reporting modest profit growth

Revenue flat over the prior corresponding period at $612.4 million
Directly attributable COVID-19 costs of $2.5 million
Earnings before interest, tax, depreciation, amortisation, and the fair value movements in biological assets (EBITDA-S) up 4.3% to $124.4 million
Net profit after tax-S up 3% to $44.4 million
Fully franked interim dividend of 4 cents per share
Net debt of $208 million, representing leverage of 1.4x

What happened in FY 2021 for Costa?

For the six months ended 30 June, Costa reported a flat revenue of $612.4 million and a 3% increase in net profit after tax to $44.4 million. A key driver of this was its International business, which delivered a record result.

International revenue increased 25% over the prior corresponding period thanks to positive pricing, yield, and demand. This was supported by its premium varieties in China, which continue to attract a significant price premium. Management believes this supports the company’s continuing development of its China farming footprint across multiple locations in Yunnan Province.

The strong performance in the International business offset a mixed performance by the Domestic business. It struggled with inclement weather and weaker avocado pricing. The latter was driven by sustained higher volumes and a contraction in the foodservice sector.

What did management say?

Costa’s CEO, Sean Hallahan, was pleased with the half and particularly the performance of its International business.

He said: “Our international segment through our operations in China and Morocco continues to make an ever-increasing contribution to our overall performance and has delivered record results. This has not only occurred because of increased berry plantings but is also an endorsement of our world leading blueberry genetics, which continue to be well received by consumers across Asia and Europe and are attracting a price premium.”

“Domestic produce performance was mixed for the half, with avocado performance impacted by high volumes and resultant pricing below forecasts. Our berry category delivered a positive performance with generally favourable pricing across our four main berry varieties. Table grape and first half citrus yields from the Sunraysia (Vic) region were unfortunately impacted by a New Year’s Day hail storm. While there were relatively positive demand and pricing conditions for mushrooms our ability to fully benefit was not able to be realised due to lower production volumes.”

What’s next for Costa?

Failing to give the Costa share price a lift today was news that it is on track to achieve its guidance in FY 2021.

Mr Hallahan explained: “We have confirmed our full year forecast which is in line with that disclosed at the 2PH acquisition and capital raise, which includes CY21 EBITDA-S and NPAT-S being marginally ahead of CY20. There is still a significant amount of domestic activity to occur over the second half, with positive momentum driving the remainder of the citrus season, especially with strong export into Japan, China and Korea, and the main berry season expected to deliver healthy growth versus previous comparable period.”

The Costa share price is now down 21% in 2021.

The post Costa (ASX:CGC) share price falls 4% after reporting modest first half growth appeared first on The Motley Fool Australia.

Should you invest $1,000 in Costa right now?

Before you consider Costa, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Costa wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

St Barbara (ASX:SBM) share price falls 3% on $177 million loss
Tyro (ASX:TYR) share price lifting off on record FY21 results
Woolworths (ASX:WOW) share price gains on 23% profit surge
Jumbo Interactive (ASX:JIN) share price slides 8% despite record FY21 performance
Polynovo (ASX:PNV) share price flat as revenue grows 32% in FY21

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!