The Costa Group Holdings Ltd (ASX: CGC) share price is crashing lower on the day of its annual general meeting.
At the time of writing, the horticulture company’s shares are down 23% to $3.39.
What happened at the annual general meeting?
Costa took investors through its performance during FY 2020 and then provided an update on its guidance for the current financial year. It is the latter that is weighing heavily on the Costa share price today.
In respect to the former, management notes that it successfully managed and executed a COVID action plan which mitigated the risk of any cases within its business and the community and ensured it could continue its day-to-day operations.
This led to Costa delivering a $59.4 million underlying net profit after tax (NPAT-SL), representing an increase of 108.4% over the prior year. This allowed the Costa board to declare a fully franked total dividend payment of 9 cents per share for the year.
What about the 2021?
The company’s new CEO, Sean Hallahan, spoke about current trading conditions. While its international operations are performing well (in constant currency), things aren’t quite as positive for its domestic operations.
He said: “In terms of the outlook for our 2021 financial year, in our international segment we are now well progressed on our harvests in both China and Morocco and as we reported in February at our full year CY20 results announcement, performance has been very positive versus previous year and expectations.”
However, due to a stronger Australian dollar, its reported results will be negatively impacted.
Speaking about its domestic operations, Mr Hallahan said: “Across the domestic produce categories, we have seen mixed performances for the current year to date. In relation to the berry category, solid pricing across the four main berry varieties has led to a good performance to date with a strong outlook.”
“Mushroom production at Monarto has been impacted by short term labour constraints, however once labour needs are fully addressed, we expect improving outcomes. Overall mushroom demand conditions remain strong going into the cooler months.”
Elsewhere, its Avocado volumes and quality have been pleasing, with export volumes continuing to grow. However, its Citrus operations are facing challenges and its Tomato operations are experiencing short term pricing pressures.
In light of the above, Costa’s first half performance is expected to be marginally ahead of the previous comparable period in 2020, with strong international operations offset by challenges in domestic produce conditions.
This has fallen well short of the market’s expectations, putting significant pressure on the Costa share price today.