Cobram Estate Olives: 2024 USA Harvest Completion and Business Expansion
CBO (CBO) Share Update December 2024 Sunday 15th
Cobram Estate Olives Completes Successful 2024 USA Harvest
Cobram Estate Olives Limited (ASX: CBO) has announced the successful completion of its 2024 Californian olive harvest, alongside significant expansion plans in the USA.
Instant Summary:
- 2024 Californian harvest produced 3.0 million litres of olive oil.
- Production 6.4% lower than 2023, but 77.1% higher than 2022.
- Only 11% of USA groves are mature, with significant growth potential.
- Expansion of grove area with new land acquisitions in California.
- Increased debt facilities with Commonwealth Bank of Australia by $40.8 million.
- Strong sales performance in both Australia and USA.
USA Harvest Overview
Cobram Estate Olives Limited (CBO) has successfully completed its 2024 Californian harvest, yielding an impressive 3.0 million litres of olive oil. Although this volume is 6.4% lower than the 2023 harvest, it is significantly higher by 77.1% compared to the 2022 'off' year. This increase is attributed to the expansion of supply contracts with third-party olive growers and the maturation of CBO's own groves in California.
Currently, only 11% of CBO's USA groves are mature, while 30% are immature and 59% are yet to come into production. This indicates a substantial potential for future growth as more groves reach maturity.
Expansion and Development Plans
CBO has completed phase 2 of the Esparto South Ranch and phase 3 of the Dunnigan Hills Ranch, adding 164 hectares of olives to their Californian groves. This brings the total grove area to 916 hectares. Additionally, the company is in the process of acquiring 1,534 hectares of land near its existing groves, which will support an additional 1,065 hectares of plantable area.
This expansion is partially funded by the company's free cash flow and an increase in debt facilities with the Commonwealth Bank of Australia, which have been reclassified as a Sustainability-Linked Loan. Meeting sustainability targets will result in interest savings for the company.
Australian Operations and Sales Performance
In Australia, flowering for the 2025 crop has commenced, with favourable climatic conditions expected to lead to normal fruit set levels. The company has also entered a 30-year agreement with a third party in South Australia to develop a 1,000-hectare olive grove.
Sales in both Australia and the USA have been strong, with packaged goods sales exceeding budget expectations. A 15% price rise in the USA has not deterred sales, which continue to grow in both value and units.
The successful harvest and expansion plans are likely to positively impact Cobram Estate Olives' stock, as they indicate strong future growth potential. The increase in debt facilities, tied to sustainability targets, positions the company well for long-term success. Investors may view the expansion and strong sales performance as indicators of robust business health.
Investor Reaction:
Analysts are likely to react positively to the news, as the company's strategic expansion and strong sales performance suggest a promising outlook. The sustainability-linked loan also aligns with growing investor interest in environmentally responsible practices.
Conclusion:
Investors should consider the potential growth opportunities presented by Cobram Estate Olives' expansion in the USA and the strong sales performance in both domestic and international markets. Staying informed on the company's progress and strategic initiatives will be key to making informed investment decisions.