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Fruit and vegetable grower Costa Group (ASX: CGC) has seen its shares spike today to levels not seen since May 2019 on the release of its bumper CY20 financial results.
After recovering from drought challenges, and on the back of favourable market conditions for the citrus, berry and avocado categories, the company's NPAT more than doubled to $58.4 million.
On a pre-tax basis, the company has returned to profitability, reporting a $67.5 million profit - up from a $34.4 million loss in 2019.
Revenue also grew by 11.2 per cent to $1.16 billion, while earnings improved by 47.2 per cent to $144.8 million.
The company also announced it is actively engaged in a citrus acquisition program to boost its Sunraysia citrus footprint to at least 700 hectares over CY21.
CEO Harry Debney said Costa managed to sail through the impacts of COVID-19 during the 2020 calendar year period, ending 27 December 2020.
"There were favourable market conditions in CY20 supported by positive demand and pricing across a number of our produce categories, including citrus, berry, and avocado.
"Our superior blueberry IP, in particular our premium Arana variety, meant we were able to sell increased volumes while also receiving a significant price premium."
In addition to the solid spike in Costa Group's share price today, the company's investors will welcome a dividend of 5 cents per share, to be paid in April.
Internationally, CGC's operations were impacted by COVID-19 volatility, particularly supply chain disruptions. This was felt by Costa's blueberry business in Morocco, and harvest in China.
Growth plans planted for citrus and avocado segments
Costa will turbocharge its citrus and avocado businesses by buying more land during 2021.
For its citrus footprint in the Sunraysia region, the company hopes to increase its holding to at least 700 hectares.
To support this, planning has commenced for the development of a large-scale packing facility to be situated in Mildura, Victoria.
New sites have also been acquired in the Riverland region to undertake high density netted citrus plantings in 2021.
"These properties will host the most progressive citrus growing techniques across the citrus category," Costa said.
As for its avocado business, the Costa board has approved a commercialisation program for the planting of 40 hectares of high-density avocado trees.
This will encompass a minimum of 1,000 trees per hectare, which is at least four times greater than conventional avocado tree plantings.
Internationally, land is being sought for a further 14 hectares to be planted in Agadir, Morocco, taking the total southern region plantings to around 102 hectares.
Additionally, a further 7.2 hectares of blueberry plantings have been completed at the Guangmen farm in China, bringing the total planted hectares at that farm to 69.
Shares in CGC are up 11.6 per cent to $4.48 per share at 11.55am AEDT.
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