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Costa Group’s local avocado numbers were hurt by lockdowns and low retail prices.Credit:Bloomberg

Chief executive Sean Hallahan said an oversupply of the ‘green gold’ waspushing prices down to $1 an avocado and denting the company’s 2021 profits.

“When you’re selling avocados at a dollar,I can tell you there’s not a farmer anywhere in Australia who’s making money out of that,and it’s not sustainable,” he said. “It’s really disappointing.”

He said the company was hoping the avocado category would recover as the economy reopens and Australians dine out. “There’ll be the food service market opening up,so there’ll be many more cafes with smashed avocado breakfasts going on,” Mr Hallahan told theSydney Morning HeraldandThe Age.

“Get out there and tell your friends to … order the odd smashed avocado breakfast. And then what’ll happen is we’ll have a bit more volume going into food service rather than retail,so our returns in retail should improve.”

Costa Group’s 2021 results were driven by international demand for its berries.Credit:Marina Oliphant

Earnings before interest,taxes,depreciation and amortisation (EBITDA) rose by 10.6 per cent to $218.2 million in 2021 compared with 2020. Costa shares rose 8 per cent to $3.24 in Tuesday’s trade.

Total revenue remained steady at around $1.2 billion. The company will pay a fully franked dividend of 5 cents per share on April 7.

Costa Group’s international business - particularly in berries - became a major profit driver for the company in 2021,growing by 30 per cent and comprising more than a quarter of total sales.

Costa Group’s domestic portfolio has started 2022 on a solid note with stronger volumes across berries,tomatoes and mushrooms.

The $1.4 billion company will look to drive earnings growth by harvesting its new 50-hectare berry farm in Baoshan,China,contributions from recently-acquired citrus empire 2PH Farms,increased premium blueberry volumes and a rebound in grape volumes.

In a note,Jarden analysts said the financial numbers were a “good result”,with net profits and EBITDA above consensus forecasts. “This result should be taken well by the market given the strong start to[the 2022 calendar year],which is consistent with data we track,” the analysts wrote.

“We expect growing confidence in the ability to hit[or] exceed this figure given the strong start. Stock should trade well today.”

Factors such as weather and demand continue to be risks for the business,the analysts added.

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