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Costa makes berry nice maiden profit

AAP logoAAP 25/08/2016 Trevor Chappell

Raspberries were particularly good for fruit and vegetable behemoth Costa Group in 2016; tomatoes were not.

Costa, which listed on the share market in July 2015, has beaten its prospectus forecasts with a 29.7 per cent lift in pro forma net profit to $49.3 million in 2015/16, while sales exceeded $1 billion for the first time.

The company is now projecting profit growth of about 10 per cent in 2017 after a bumper 2016 in which blueberries and raspberries were star performers.

"The contribution of raspberries to our produce performance has been exceptional this year and follows six years of continuous growth where raspberries now rank equally as significant as our blueberry crop," said Costa chief executive Harry Debney.

Costa is expanding its Australian berry production, completing 76 hectares of new plantings during the year in Tasmania, Western Australia, far north Queensland, and NSW.

Mr Debney said Costa's international operations made a meaningful financial contribution for the first time in 2015/16, again boosted by berries.

Costa's blueberry varieties were successful in the UK, Europe and the Americas, with the company's joint-venture plant in Morocco, which supplies the UK and Europe, lifting sales by more than 76 per cent amid favourable growing conditions.

Costa also established a joint-venture blueberry and raspberry farm at Shiping in China's Yunnan Province, and a second farm in China is currently being established in Manlai near the Burmese border.

Tomatoes by comparison were a soft spot for the company due to oversupply.

Demand for citrus in export markets was buoyant, especially in Japan, which resulted in nearly 60 per cent of the crop being sold overseas.

Mr Debney said it was very pleasing that the company had exceeded its prospectus forecast earnings.

"It was a strong performance from our overall portfolio which did offset challenging market conditions in the tomato category," he said.

Shares in Costa were seven cents lower at $2.85 at 1530 AEST.

COSTA GROUP PROFIT UP 30 PER CENT

* Pro forma full-year profit up 29.7pct to $49.3m

* Pro forma revenue up 11.8pct to $809.0m

* Final dividend of six cents per share, fully franked

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