Australia’s biggest grower of fruit and vegetables is expanding its berry and citrus operations after a juicy half year profit increase.
Costa will spend $80 million on 11 new berry projects over four years from 2017 to 2020.
The plan, which covers blueberries, strawberries, raspberries and blackberries, will build farming and support infrastructure in far north Queensland, northern NSW and either Tasmania or southern Western Australia.
“It’s a big project for us,” chief executive Harry Debney said.
Citrus output will be expanded with a 130-hectare orchard in South Australia’s Riverland district, adjacent to Costa’s existing operation.
“This will bring our total aggregation to five orchards which is quite important as we continue to ramp up our citrus presence,” Mr Debney said.
The expansion plans were announced as Costa, which listed on the share market in July 2015, reported a net profit of $557,000 for the six months to December, up from a $5.8 million loss a year earlier.
Sluggish sales and lower prices for tomatoes were offset by a strong raspberry crop and higher demand, which has prompted the production expansion.
Blueberry sales were also strong as competitors were affected by hail storms, while mushrooms remained a solid earner.
Costa’s citrus orchards had a bumper year, with a large, quality crop.
The lower Australian dollar has also boosted Costa’s export operations, and it recently signed a joint agreement with US berry supplier Driscoll’s to produce berries for the expanding Asian middle class market.
“Importantly, we’ve located what we believe is a major expansion site down near the Burmese border and we’re currently clearing land and we’ll be planting 20 hectares there,” Mr Debney said.
The company has reaffirmed its forecast of a $47.6 million full year pro-forma profit.
Costa shares dropped 10 cents, or four per cent, to $2.42.
COSTA’S FRUITFUL HALF YEAR
* Net profit of $557,000, up from $5.8m loss
* Pro-forma revenue up 12.7 per cent to $403.8m
* Interim dividend of three cents