Cobram Estate Olives Limited (ASX:CBO) Completes Successful USA Harvest
Successful USA Harvest
Cobram Estate Olives Limited (ASX: CBO) has announced the completion of its 2024 Californian harvest, successfully producing 3.0 million litres of olive oil. This represents a 6.4% decrease compared to the previous ‘on’ year but is 77.1% higher than the ‘off’ year in 2022. The increase in production is attributed to a larger area under supply contract from third-party olive growers and the maturation of company groves.
The production from CBO’s own groves accounted for 23% of total output this year, up from 11% in 2023. Despite only 11% of CBO’s USA groves being mature, the milling extraction efficiencies and extra virgin olive oil quality exceeded expectations.
Grove Development and Expansion Plans
CBO completed the development of phase 2 of the Esparto South Ranch and phase 3 of the Dunnigan Hills Ranch, planting 164 hectares in November 2024, which increases the total area to 916 hectares. Additionally, the company is in the process of acquiring 1,534 hectares of nearby land to support further development, anticipated to double the company-owned grove area in the USA. This acquisition is funded through free cash flow and debt, with a significant portion covered by newly extended debt facilities from the Commonwealth Bank of Australia (ASX: CBA).
Australian Operations and Sales Performance
In Australia, flowering for the 2025 crop has begun, coinciding with favourable climatic conditions. 2025 is projected to be a higher-yielding crop year for many of CBO’s Australian groves, though yields remain subject to the risks associated with agricultural production.
CBO has entered into a 30-year agreement with a third party to plant a 1,000-hectare olive grove in South Australia, demonstrating further growth in operations. CBO’s sales in Australia and the USA have outperformed expectations, with packaged goods sales well above budget for the five months to 30 November 2024. A recent 15% price increase in the USA has not hindered sales, which continue to show strong growth in both value and units.
Motley Fool contributor Lauren Surplice has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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