Cobram Estate Olives Limited (CBO) has released a strong business update highlighting the successful completion of its 2024 Californian harvest, significant growth initiatives, and robust sales performance across key markets.
Key Highlights
USA Operations
- 2024 Californian Harvest:
- Produced 3.0 million litres of olive oil, only 6.4% lower than 2023, despite being an ‘off’ year.
- Production was 77.1% higher than the 2022 ‘off’ year, driven by expanded third-party supply and maturing groves.
- Company-owned groves contributed 23% of total production (up from 11% in 2023).
- Maturity Profile:
- Currently, 11% of USA groves are mature, 30% immature, and 59% yet to commence production, signaling substantial future growth potential.
- Land Acquisition and Grove Development:
- Planted 164 hectares in November 2024, bringing total USA company grove area to 916 hectares.
- Acquiring an additional 1,534 hectares for further development, adding 1,065 hectares of plantable grove area.
- Once fully developed, USA grove area will more than double, enhancing medium-term supply capacity.
- Acquisition funded through a mix of free cash flow and expanded debt facilities.
Sustainability-Linked Loan:
- Debt facilities with Commonwealth Bank of Australia increased by A$40.8 million, with reclassification to a Sustainability-Linked Loan.
- Achieving sustainability targets will result in lower interest costs for CBO.
Australian Operations
- 2025 Flowering:
- Flowering occurred in late October, with full bloom at Boundary Bend and Boort groves in line with long-term averages.
- Favorable climatic conditions have led to normal fruit set levels.
- As 2025 is a higher-yielding year for many Australian groves, production outlook remains strong, subject to standard agricultural risks.
- Third-Party Plantings:
- Entered a 30-year agreement for a 1,000-hectare olive grove in South Australia, operated by a third party.
- CBO will supply nursery trees, provide technical support, and market the oil, replicating existing third-party grower agreements.
Sales Performance
- Packaged Goods Sales:
- Both Australian and USA sales are performing strongly, surpassing budget and prior-year levels for the 5 months to November 30, 2024.
- A 15% price increase in the USA (implemented September 2024) has not dampened demand, with branded sales growing in both value and volume.
Outlook and Strategic Implications
Cobram Estate continues to position itself for long-term growth with a clear focus on:
- Expanding USA operations: The doubling of grove area and maturing profile of existing plantations will drive medium-term production growth.
- Sustainability initiatives: The adoption of a Sustainability-Linked Loan reinforces the company’s commitment to ESG principles.
- Strong sales performance: Price resilience and robust demand highlight the strength of CBO’s brand and market positioning.
With favorable industry dynamics and its proactive growth strategy, CBO remains a compelling investment for those seeking exposure to the agricultural and premium food sectors.
