The Costa Group Holdings Ltd (ASX: CGC) share price has pushed higher in morning trade following the release of its results for the six-month financial period ended December 30.
As the horticulture company is changing its reporting period to a calendar year basis, due to the ever increasing proportion of the company's earnings occurring in the first half of the calendar year, these results are not classed as half year results and have been labelled as its "FP2018" results.
What happened in the half?
During the period the company achieved revenue of $478 million and EBITDA before SGARA, material items, and amortisation (EBITDA-S) of $35.3 million. This was a 2.4% and 42% decline, respectively, on the prior corresponding period.
NPAT before SGARA and material items and amortisation (NPAT-S) came in at $8.5 million, down from $28.6 million a year earlier.
This was driven by subdued trading in December and was largely in line with expectations after management provided a trading update at the start of January.
In addition to this, Costa's CEO, Harry Debney, explained: "The six-month financial period to December has delivered a lower profit number than expected. There were several contributing factors to this, some of which had been accounted for including bringing African Blue on to our balance sheet as a result of majority ownership, additional preharvest farming cost investment through our increased international footprint and an 'off' citrus season in terms of the biennial nature of the crop."
The good news is that the company remains on target to meet its medium to long term profit growth objectives. This includes "building capacity, opening new markets, both domestic and international, further developing product premiumisation and differentiation and investment in the automation of harvest and post-harvest activities."
Another positive is that trading conditions have improved since its last update. Management advised: "During February solid price recovery has been experienced across our categories from the earlier challenging period."
As a result, its expects calendar year 2019 profit growth of at least 30%.
Should you invest?
It has been a shaky few months for Costa but things look to be improving now. So with its shares down 42% from their 52-week high and changing hands at 21x estimated FY 2019 earnings, I think they could be worth considering along with fellow consumer staples shares A2 Milk Company Ltd (ASX: A2M) and Treasury Wine Estates Ltd (ASX: TWE).
