AMSTERDAM, The Netherlands – JDE Peet’s, the world’s leading pure play coffee and tea company, reported today full year results for2022. Total reported sales increased by 16.4% to EUR 8,151 million. Excluding a positive effect of 4.7% related to foreign exchange and 0.3% related to scope and other changes, total sales increased by 11.3% on an organic basis.
Organic sales growth reflects a price effect of 15.8% and a volume/mix effect of 4.4%. In Home sales increased by 8.9% and sales in Away from Home increased by 22.3%. Total adjusted EBIT decreased by 5.9% to EUR 1,227 million on a reported basis.
Excluding the effects of foreign exchange and scope and other changes, the adjusted EBIT decreased organically by 9.3% as SG&A increased by 10.6%, driven by investments in marketing, innovations and other strategic growth capabilities.
Underlying profit excluding all adjusting items net of tax increased by 4.1% to EUR 936 million. It includes an underlying tax rate of 23.6% and was supported by lower interest expenses, mainly as a result of a lower average cost of debt, and a reduction of other finance expenses.
Net leverage improved to 2.65x net debt to adjusted EBITDA. Liquidity position remains strong, with total liquidity of EUR 2.4 billion consisting of a cash position of EUR 0.9 billion and available committed RCF facilities of EUR 1.5 billion.
CPG (Consumer Packaged Goods) Europe
Organic growth of 1.8% was driven by an increase in price of 14.5% and a decrease in volume/mix of 12.7%. While volume elasticity remained below the historical average, volumes were negatively impacted by retaliations during customer negotiations across various European markets, including Germany, France and the UK.
The decline in volume/mix also reflects a high base of comparison, as lockdown measures continued to be lifted, shifting a part of In Home consumption back to Away from Home channels, which benefited the Out of Home segment.
Notable strong performance was delivered by countries such as Poland, Hungary and Denmark and brands including Jacobs and Gevalia.
Reported sales increased by 1.9% to EUR 3,640 million, including a net positive effect of 0.1% from foreign exchange and changes in scope. Adjusted EBIT decreased organically by 26.2% to EUR 807 million, mainly driven by lower volumes caused by retaliations, as well as a step up in marketing investments.
Based on a 3 year CAGR, the organic adjusted EBIT growth was 5.6%, including higher marketing investments.
CPG LARMEA
Organic growth of 32.5% consisted of an increase in price of 33.1% and stable volume/mix of ( 0.6)%. The resilient volume/mix performance was broad based across geographies, product portfolio and price points.
Brazil in particular delivered resilient volume growth while recording the strongest pricing in the region.
Reported sales increased by 48.1% to EUR 1,616 million, including a foreign exchange impact of 15.8% as the main currencies in this segment appreciated against the euro. Adjusted EBIT increased organically by 38.1% to EUR 296 million, mainly reflecting higher pricing from the timing of price increases to pass through inflation, and a low base of comparison. Based on a 3 year CAGR, the organic adjusted EBIT growth was 17.0%.
Peet’s Organic growth of 12.2% was driven by an increase of 9.4% in price and 2.8% in volume/mix. In the US, most lockdown measures had been lifted in the first part of FY 22.
As a result, Peet’s coffee retail stores in the US delivered high single digit growth in sa me store sales in FY 22, while its In Home business delivered low teens organic sales growth in FY 22 and mid teens organic sales growth on a 3 yr CAGR. In China, Peet’s increased its coffee retail store network by 47 to 117 stores.
Reported sales increased by 26.3% to EUR 1,141 million, which included a positive foreign exchange impact of 14.2%. Adjusted EBIT increased organically by 9.8% to EUR 147 million. Based on a 3 year CAGR, the organic adjusted EBIT growth was 15.8%.
Jde Peet’s – Out of Home
Organic growth of 26.6% was driven by an increase of 15.1% in volume/mix and 11.5% in price as the segment benefited from increasing levels of activity in its Out of Home channels following the lifting of lockdown measures in the first part of 2022 and pricing to offset inflation. The overall growth performance was broad based, with not able strong performance in countries such as Germany, the UK and France and from brands including Douwe Egberts, Jacobs and Gevalia.
Reported sales increased by 25.7% to EUR 908 million, including an impact of 0.4% related to foreign exchange and 0.5% related to scope and other changes. Adjusted EBIT increased organically by 31.6% to EUR 119 million, driven by operational leverage and efficiencies. Based on a 3 year CAGR, the organic adjusted EBIT declined by 13.1%.
CPG APAC
Although a few markets continued to be impacted by lockdown measures in 2022, the region delivered a solid double digit growth level. Organic growth of 10.1% was driven by an increase of 8.6% in price and 1. 4% in volume/mix, with notable strong performance in countries such as Thailand, Malaysia and China, and from brands including OldTown, Super and Moccona.
JDE Peet’s: Medium- to Long-Term Targets
For the medium- to long-term, JDE Peet’s continues to target organic sales growth of 3 to 5% and mid-single-digit organic adjusted EBIT growth, a free cash flow conversion of approximately 70% and stable to increasing dividends over time.
Outlook 2023
JDE Peet’s aims to achieve the following in 2023:
- Organic sales growth at the high end of its medium term range of 3 5%
- Low single digit organic adjusted EBIT growth, with a moderate increase in SG&A
- A stable dividend
Dividend
JDE Peet’s’ Board proposes to pay a dividend of EUR 0.70 per share in cash related to FY 22. The dividend will be paid in two instalments of EUR 0.35 each. The first payment date will be on Friday, 14 July 2023, with the ex dividend date on Monday, 10 July 2023 and the record date on Tuesday, 11 July 2023.
The second payment date will be on Friday, 26 January, 2024, with the ex dividend date on Monday, 22 January 2024 and the record date on Tuesday, 23 January 2024. The dividend proposal is subject to approval by the Annual General Meeting of Shareholders to be held on Thursday, 25 May 2023.
ESG: significant progress made and ambition level raised
JDE Peet’s’ sustainability strategy is built on three pillars: Responsible Sourcing, fostering thriving agricultural supply chains; Minimising Footprint, to reduce the company’s environmental impact; and Connecting People, to engage the company’s employees and its communities.
Through its responsible sourcing and supplier engagement programme, JDE Peet’s is committed to a sustainable supply of coffee & tea from various origins that supports farming communities’ vision of prosperity and contributes to healthy ecosystems. During the year, the company made strong progress towards its commitment of 100% responsibly sourced green coffee by 2025, reaching 77%, a significant improvement compared to the 30% reported in 2021. The primary driver for the increase resulted from the verification efforts of Enveritas, a non-profit organisation that verifies coffee purchases against sustainable coffee standards. JDE Peet’s also achieved 100% responsibly sourced palm oil and partnered with the Rainforest Alliance in Turkey to deploy a programme to drive 100% responsible sourcing of its Ofçay teas by 2025. As such, the company is well on track to have 100% of its coffee, tea and palm oil responsibly sourced by 2025.
JDE Peet’s also continued to make good progress in reducing its footprint. In 2022, the company reduced its scope 1 & 2 emissions by 15% and scope 3 emissions by 1% versus the 2020 baseline. During the year, JDE Peet’s also defined a roadmap of initiatives that will enable the company to submit an even stronger and new SBTi ambition in 2023 to reach net-zero. In addition, 78% of the company’s packaging components are now designed to be reusable, recyclable, or compostable. And by the end of the year, 22 of its manufacturing sites were zero waste-to-landfill. JDE Peet’s also further increased the percentage of renewable energy used at its sites in Brazil, Europe and Pacific.
In 2022, the company also conducted a gender pay equity analysis, which showed that, within JDE Peet’s, the difference in the pay of males and females is less than 1%, which is well under the future EU directive’s threshold of 5%.
Fabien Simon, CEO of JDE Peet’s stated:
“I am very pleased with the way JDE Peet’s navigated 2022, a year impacted by the ongoing effects of unprecedented inflation, decreasing consumer confidence, and the tragic war in Ukraine.
Last year required us to make difficult but courageous choices on cost competitiveness and pricing leadership. We acted as a true category leader and wer e able to meet or exceed our financial commitments, without compromising on investments, nor on quality of our products and services.
In 2022, we delivered double digit sales growth, increased our absolute gross profit, delivered strong free cash flow and higher EPS, while increasing investments to support our long term growth ambition in areas such as marketing, innovation, digital commerce, emerging market capabilities and sustainability.
Consequently, we are emerging stronger for 2023, with an elevated growth portfolio, a competitive market share position, a well invested business and a more productive and very engaged enterprise.
These many results and achievements were made possible by the resilience, resolution and agility of our people, who wo rked incredibly hard, together with every partner in our ecosystem, to manage these turbulent times, while simultaneously making continued strong progress on our growth and purpose led strategy.
Although many of the conditions and challenges we faced in 2022 will to some extent persist in 2023, we believe that our pure play focus, strong fundamentals, brands and innovation capabilities position us well to continue to create attractive shareholder returns as well as societal value.”
