Costa Group’s Shares Nosedive About 34% After Announcing Reduction In The Earning Guidance

  • Jan 10, 2019 AEDT
  • Team Kalkine
Costa Group’s Shares Nosedive About 34% After Announcing Reduction In The Earning Guidance

Australia’s leading grower, packer and marketer of fresh fruit & vegetables, Costa Group Holdings Limited (ASX: CGC) made an announcement on 10 January 2019 stating that during December 2018 the company has experienced subdued demand in various categories, namely tomato, berry, and avocado. Further, the company also informed that the trading conditions in January 2019 are also appearing bleak in comparison to what was planned. Following this news, the share price of the company plunged by 33.65 percent as on 10 January 2019.

Due to the subdued demand in various categories the prices of the number of product lines have been reduced. The company is also getting affected by the short-term slippage of the commissioning of the Monarto mushroom facility upgrade in South Australia. The company is also bearing additional costs from investments such as African Blue. Today the company has informed the market that the above-mentioned factors will result in a reduction to the previously guided interim FY 2018 forecast ending December 2018. In the previously announced guidance, the company was expecting to generate low double-digit NPAT-S growth in the year ahead to 30 June 2019. However, now the company is expecting the growth in the twelve-month NPAT-S (Net Profit After Tax before SGARA) to the end of June 2019 to be largely flat as compared to the last year.

Despite announcing a reduction in the previously guided interim forecast, the company is considering the current trading conditions as a cyclic situation, and it is expecting that the trading for the CY 2019 will produce an NPAT-S result materially in line with previous guidance. As per the previous guidance, the NPAT-S would maintain an annual double-digit CAGR (Compound annual growth rate) for the two calendar years 2017 to 2019.

As per the announcement, the ongoing growth plans across the categories are continuing to track well. The company’s growth initiatives include Merger and Acquisition activity in its avocado category and acquisitions of citrus farming assets. The company is also planning expansion in its mushroom and tomato production capacity. Further, the company is also making investment in its international segment, namely African Blue in Morocco and its berry production footprint in China.

For financial year 2018, the company earned a total revenue of $1,002 million which was 10.2 percent higher than the previous corresponding period. Further, the company earned a Net Profit after Tax of $76.6 million which was 26.3 percent higher than the previous year. The EBITDA before SGARA was $150.8 million, which was 30.9 percent higher than previous corresponding period.  In October 2018, the company paid the final dividend of 8.5 cents per share, fully franked, taking the full year dividend to 13.5 cents per share which is 22.7 percent higher than previous corresponding period.

Meanwhile, in the last six months, the share price of Costa Group decreased by 2.64 percent as on 9 January 2019. CGC’s shares traded at $4.890 with a market capitalization of circa $2.36 billion as on 10 January 2019 (AEST 1:25 PM).


Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.

 

All pictures are copyright to their respective owner(s).Kalkinemedia.com does not claim ownership of any of the pictures displayed on this website unless stated otherwise. Some of the images used on this website are taken from the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image.

 

There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.

As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.

CLICK HERE FOR YOUR FREE REPORT!
   
x
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK