Costa Warns Again After Citrus Crops Hit By Hailstorm

Believe it or not but there’s another profit warning – small this time – from Costa Group.

The company told the ASX late on Thursday that some of its citrus farms in South Australia were hit by a hail storm on Tuesday.

Costa said that the storm could have a $3 million to $4 million impact on its net profit in its 2020 (calendar) financial year.

“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 farms sustained little or no impact.

The company stressed that this was a very preliminary update and the actual impact could turn out to be minor.

“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,” Costa said.

Costa is in the process of raising money from retail shareholders and recently raised $87 million from institutional investors (part of a $176 million capital raising) as well as downgrading 2019’s earnings for a fourth time this year.

It also said it was possible that the storm would have no ultimate financial impact and that its overall portfolio could “counterbalance” any potential adverse impact.

The company has not changed its 2020 forecast of a net profit of about $56.6 million.

Costa said there would be no impact on its nearly completed 2019 citrus harvest and no impact in 2021 was expected.

Costa made the announcement at 3.40 pm (trading finishes at 4 pm) so the news had some time to impact on the share price.

But Costa shares closed up 1.5% at $2.79.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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