MILAN – Jde Peet’s, the world’s leading pure-play coffee and tea company, released on Wednesday half-year results beating analyst expectations and raised its outlook for fiscal year 2024. The Amsterdam-based giant posted 3.6% organic sales growth for the first half of the year, beating the 2% expected by analysts in a consensus provided by the company itself. Group adjusted EBIT rose to 692 million euros ($749 million) from 581 million a year earlier and beating the 601 million expected by analysts.
JDE Peet’s: Total reported sales increased by 5.6% to EUR 4,210 million
Excluding a -1.8% effect related to foreign exchange and 3.9% related to scope and other changes, sales increased by 3.6% on an organic basis. Organic sales growth was driven by a price effect of 2.4% and a volume/mix effect of 1.2%. In-Home sales increased organically by 3.4% and in Away-from-Home by 4.2%. The 5-year organic CAGR for sales was 5.0%.
Total adjusted EBIT increased organically by 17.5% to EUR 692 million. The increase was driven by an organic increase of 9.0% in adjusted gross profit, including a one-off EUR 16 million insurance payout related to a warehouse issue that impacted performance at Peet’s in H1 23, and disciplined cost control. A&P was broadly around the same level as in the same period last year, increasing slightly on an organic basis.
The 5-year organic CAGR for adjusted EBIT was 4.4%. Including the effects of foreign exchange and scope changes, adjusted EBIT increased by 19.2%. Operating profit more than doubled to EUR 672 million, which is partially explained by EUR 238 million lower adjusting items compared to the same period last year.
Profit for the period increased by 86.5% to EUR 360 million. Underlying profit – excluding all adjusting items net of tax – decreased by 10.0% to EUR 370 million.
This performance was mainly driven by an unfavourable non-cash, non-tax deductible impact of EUR 113 million from a fair value change in the company’s equity derivatives, due to the decrease in the share price in H1 24.
Excluding the aforementioned fair value change, the underlying effective tax rate would have been around 25% and underlying profit would have been EUR 483 million, or 17.5% higher than in H1 23.
Free cash flow was EUR 315 million in the first half of 2024. Net debt increased by EUR 890 million to EUR 4,780 million in the first half of 2024, which was driven by the transaction considerations related to Maratá and Caribou.
As a result, net leverage was 3.1x net debt to adjusted EBITDA at the end of H1 24. JDE Peet’s’ liquidity position remains strong, with total liquidity of EUR 2.7 billion consisting of a cash position of EUR 1.2 billion (excluding restricted cash) and available committed RCF facilities of EUR 1.5 billion.
Europe
Organic sales growth of 1.0% was driven by an increase in volume/mix of 1.4% and a decrease in price of -0.4%. Both the In-Home as well as the Away-from-Home businesses delivered positive volume/mix which was slightly offset by price, reflecting a high comparable base. Notable strong performance was delivered by countries such as France, the Nordics and Italy and brands including L’OR, Gevalia and Les 2 Marmottes. Reported sales increased by 1.3% to EUR 2,277 million, including a 0.2% effect from foreign exchange.
Adjusted EBIT increased organically by 14.1% to EUR 539 million in H1 24, reflecting the interplay of the phasing of inflation and pricing, ongoing productivities, a stable level of A&P, as well as a relatively low base of comparison. The 5-year organic CAGR for adjusted EBIT was -0.9%.
LARMEA (Latin America, Russia,. Middle East and Africa)
Organic sales growth of 11.8% was driven by an increase of 9.8% in price and 2.0% in volume/mix. Volume/mix was softer due to challenging market conditions in Brazil, while price growth reflected the required additional price increases to offset the recent material increase in green coffee prices. The integration of Maratá is progressing well and performance to date is evolving according to plan.
Reported sales increased by 21.9% to EUR 918 million, including a 18.9% scope/other effect related to the acquisition of Maratá, and a foreign exchange effect of -8.8% mainly related to the Russian ruble and the Turkish lira. Adjusted EBIT decreased organically by 10.1% to EUR 125 million in H1 24, mainly reflecting transactional forex impact and the carry-over effect of the brand transition in Russia in 2023. The 5-year organic CAGR for adjusted EBIT was 12.6%.
Peet’s
Organic sales growth of 4.3% was driven by an increase of 2.3% in volume/mix and 2.0% in price. Peet’s’ In-Home business continued to deliver competitive growth while in its US coffee retail stores, same stores sales and ticket size were up and Peet’s China continued to deliver strong double-digit growth.
Reported sales increased by 6.4% to EUR 613 million, which included a positive scope effect of 2.1% related to the consolidation of Caribou since 26 March 2024. Adjusted EBIT increased organically by 41.7% to EUR 97 million, reflecting strong operational performance, cost efficiencies and a EUR 16 million insurance payout related to a warehouse issue that impacted Peet’s’ performance in H1 23. The 5-year organic CAGR for adjusted EBIT was 16.0%.
APAC
Organic sales growth of 0.8% was driven by an increase of 4.4% in price and -3.7% in volume/mix, reflecting overall market softness and the carry-over impact from last year’s SKU rationalisation, as well as softness in APAC’s Away-from-Home business. Sales performance was geographically mixed, with strong performances in countries such as Malaysia and China offset by softer performances in Australia and New Zealand.
Reported sales decreased by 2.4% to EUR 387 million, including a foreign exchange effect of -3.1%. Adjusted EBIT increased organically by 60.1% to EUR 85 million in H1 24, mainly reflecting i) a low base of comparison related to one-off costs from a temporary supply chain disruption in H1 23 connected to one of our main manufacturing facilities in the region, ii) the interplay between pricing and the usage of lower priced green coffee from inventories, and iii) the positive effect from last year’s SKU rationalisation. The 5-year organic CAGR for adjusted EBIT was 13.9%.
JDE Peet’s: Outlook 2024
Taking into account the strong performance in H1 24 as well as the expectations for H2, including the continued inflation and volatility in green coffee prices and the additional pricing this will require, JDE Peet’s increases its outlook for full-year 2024:
- Organic sales growth at the higher end of its medium-term range of 3 – 5% (increased);
- Organic adjusted EBIT growth of around 10% (increased);
- Free cash flow of at least EUR 850 million (increased);
- Net leverage below 3x (improved);
- Stable dividend (unchanged)
