Costa announces AU hailstorm damaged three of their citrus farms

Costa Group Holdings Limited, Australia’s grower, packer and marketer of fresh fruit and vegetables provided the following update on the hailstorm event that occurred in the Riverland (South Australia) region in the late afternoon of 5th November 2019:

"Costa subsequently undertook significant work to form a preliminary assessment of any impact on our farms. Given the preliminary nature of this assessment, the fact that a potential impact may or may not eventuate and that Costa’s overall portfolio performance may counterbalance any adverse impact, it would ordinarily be too early to announce any potential impact from such an event. However, as the recently announced pro-rata entitlement offer is currently in progress, we believe that more fulsome disclosure of indicative information is appropriate at this stage."

"Three of Costa’s seven citrus farms have been affected by the hail storm – Yandilla, Kangara and Amaroo. These farms have a total of circa 1,700 hectares and of this, circa two thirds of these farm sustained little or no impact."

"The trees on those parts of the farms affected have not sustained any structural damage, with the only damage being on the early stage fruitlets that are naturally forming on the trees at this time of year."

"With the 2019 harvest reaching its conclusion, there will be no financial impact for the remainder of CY19. On the basis of there being no significant tree damage, it is not expected that there will be any impact in CY21."

"It is not expected that there will be any impact on yield in CY20, however there may be some impact on the quality of some of the crops which, if it eventuates, may have an impact on pricing in CY20."

"A natural part of the citrus growing process involves the falling of some fruitlets, which occurs over the early summer period. We anticipate that more of the fruitlets that fall this season will be the damaged fruitlets, with a higher proportion of the undamaged fruitlets remaining on the trees. However, this will not be known until the normal conclusion of this cycle in late CY19. Therefore, it is anticipated that by early in the new year we will be able to conduct a more thorough assessment of any impact on CY20 earnings."

"Based on current information available to us, if the quality of some of the crops is impacted, we estimate that there may be an EBITDA-SL impact of between $4m-$6m and a corresponding NPAT-SL impact of between $3m-$4m in CY20. However, given the preliminary nature of this assessment and it being too early to predict how other parts of Costa’s portfolio will perform in CY20, it is too early to determine whether any impact from this event will result in a change to the recently announced CY20 forecast." 

For more information: 
Michael Toby
Costa Group
Tel: +613 8363 9071
Email: investors@costagroup.com.au
www.costagroup.com.au


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