Australian (ASX) Stock Market Forum

CBO - Cobram Estate Olives

Could you please further clarify:

The Government revived legislation proposed by the previous Government preventing passing on franking credits where the dividend is funded by a capital raising. The consultation period has passed but it is not yet law. It doesn't necessarily prevent payment of a dividend as one OP thinks - but didn't research as per usual.


Also be aware from the date of the October Budget franking will not apply to discounted off-market buy backs which include a dividend. The reasoning being the measure brings it in line with on-market buy backs where a company buys back the shares but not the franking. As per here:

I guess this fits under "other stuff."

Say farewell to off-market buybacks at a discount which includes juicy franked dividends. Franking will not apply as at the delivery of last night's Budget.

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With 60% of the current olive crop harvested there’s going to be a significant shortfall compared to 2021, but a significantly more olives than was harvested in 2022.

Based on the current trends and the areas and varieties harvested, it is expected that the combined production of both groves would be between 12.6 million and 13.2 million litres.

This compares to last year’s harvest of 9.5 million litres (the last ‘off-year’) and 16.1 million litres (the last ‘on-year’ in 2021).

According to Cobram, olive trees naturally bear fruit in two-year (biennial) cycles, with a lower yielding crop one year (e.g. FY2022) followed by a higher yielding crop the next (e.g. FY2023). This is a known and expected two-year cycle that Cobram says it easily manages.

So the bottom line is that the 2023 harvest will be lower than the last two years, but because there will be more than last year, that will end up a good thing for olive buyers and consumers of olive oil.

The expected crop is 20% to 25% below our initial forecast and as previously announced this is largely driven by the unusually cold and shorter growing season delivering lower-than-average oil content in the fruit combined with smaller fruit size.,” The company explained.

It made it clear that the current harvest (which only has a couple of weeks to go) won’t see Australia run short and the 2024 crop is looking promising here, while in California where it also operates, Cobram is confident about the harvest later this year...
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The impact of a long drought across the southern European and north African growing zones continue to pressure imports into Australia.

Cobram said “Imported olive oil products remain under increased margin pressure with European olive oil supply well down and bulk prices at 20-year highs. This has resulted in material retail price increases for imported olive oils in Australia, the USA, and Europe."
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Nearly dividend time is it?
I think it was 15th November last year.

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Yes, doesn't give an ex date in the annual report but details to be expected at the AGM.
3.3c paid some time in December.

I was unimpressed when I looked at this recently because of the low ROE but reading the preso persuades me they have good growth prospects. I read: highly productive farming techniques, a foothold in California and emphasising quality and trustworthiness which hopefully will meld into their brand - particularly as consumers recognise that Cobram doesn't adulterate with other oils - one of the reasons I always buy their product.

Not Held

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Mmmm, I dunno So_Cynical, I think you are absolutely right - low margin price taker, horrible metrics, I really don't like ag stocks, nearly always just commodity businesses. The other thing with CBO is it's just not been listed long enough to get a real read on any potential business quality, but at this stage I see nothing to suggest it's an investible business. Its debt ridden, its still strongly FCF negative so not actually profitable. The amount of glossy pics and hype in the AR is a red flag as well!!
 
Mmmm, I dunno So_Cynical, I think you are absolutely right - low margin price taker, horrible metrics, I really don't like ag stocks, nearly always just commodity businesses. The other thing with CBO is it's just not been listed long enough to get a real read on any potential business quality, but at this stage I see nothing to suggest it's an investible business. Its debt ridden, its still strongly FCF negative so not actually profitable. The amount of glossy pics and hype in the AR is a red flag as well!!
I do like to grab me some cobram EVO whenever its 50% off at woolies :D
 
not a big buyer of olive oil period maybe 3 bottles in my entire life ( so far )

maybe if i used more i might see the investment potential in olive oil stocks
 
@divs4ever it's the edible oil of the future as more consumers come to the view that omega 6 rich seed oils are inflammatory and some credible people (on youtube!) implicate seed oils in chronic diseases.
Then, specific to Cobram, no other brand that I know of offers deep discount campaigns like Cobram and to reiterate, Cobram is on the front foot by differentiating itself from European brands because Europe manufacturers are associated with scandalous mafia substitution rackets whereby they have blended olive oils with seed oils but marketed them as pure olive oil. To be reasonably certain you do not fall prey to this the easy short cut is to buy Cobram or Red Island brands as they are explicitly not implicated with substitution.

QED
 
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