Costa (ASX: CGC) shares rallied 9% as investors look beyond a challenging year weighed by weak avocado pricing, disrupted supply chains and labour availability.
For the 2021 calendar year, total revenues rose 4.8% to $1.2bn while profits fell -22.6% to $52.2m.
Excluding fair value movements in biological assets and material items, profits increased 16.2% to $64m. This figure was well-ahead of Morgans' forecasts of $57m.
“There was strong second half momentum across our domestic produce portfolio, with the only downside being the performance of the avocado category,” CEO Sean Hallahan said.
“Sales and earnings in our berry category improved significantly over the prior year and mushroom and tomato volumes were up over the second half, benefiting from solid demand and pricing.”
Final dividend of 5.0cps brings the full year payout to 9.0cps.
Avocados have faced significant price deflation due to record industry volumes, foodservice lockdowns and low retail price points.
The avocado segment was 5% of Group revenues, down from 16% a year ago.
Costa expects industry avocado production to be below 2021 output while foodservice markets rebound.
Costa's international achieved a record $118m revenue, up 30% and representing 27% of Group earnings.
Hallahan pointed to further investment into the company's international operations, targeting areas including China's middle class, European berry consumption and emerging regions such as India.
Costa expects "significant earnings growth: in 2022, bolstered by the performance of international farms in China and Morocco.
Farming conditions for core domestic produce appeared sound, with berry and tomato volumes ahead of forecast, and mushroom production volumes significant improved.
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