JDE Peet’s Reports Half-Year Results 2021

CoffeeNetwork (New York) – Today, JDE Peets reported their half-year results for 2021.

Highlights include:

• Total organic sales grew 4.2%, supported by In-Home momentum (+4.9%) and fuelled by Single Serve and Beans growing double-digit. E-commerce grew by 30% In-Home
• Away-from-Home returned to profitability, despite largely stable sales base on average for H1 (+0.7%) although with visible positive reopening effects in Q2
• Organic adjusted EBIT grew 0.8% to EUR 636 million, with gross profit margin expansion
• Free cash flow of EUR 553 million and net debt reduced to EUR 4,660 million
• Leverage reduced to 2.98x, from 3.23x at the end of FY 20
• Underlying EPS grew 12.9%, mainly supported by operational improvements
• Positive market share performance across technologies and continued progress on Sustainability
• Confident to reach FY 21 outlook

Outlook 2021

Although vaccination programmes around the world continue to support the gradual lifting of lockdown measures, the COVID situation remains highly volatile and uncertain as, unfortunately, spikes in infection rates in a number of countries continue to lead to new lockdowns. This continues to limit the visibility and predictability regarding the timing and the pace of the recovery in our Away-from-Home businesses.

Within this context, we continue to expect organic sales growth of 3 to 5% in FY 21, assuming a gradual recovery in Away-from-Home. We also continue to expect organic adjusted EBIT to grow in the low single digit range in FY 21, as we step up our investments for growth, notably in marketing and innovation support.

CPG Europe

Organic growth was driven by volume/mix as a result of the continued focus on premium offerings like Single Serve and Beans, as well as continued elevated In Home consumption because of changing consumer behaviour during the COVID-19 lockdowns. This growth performance was broad-based across countries with particularly strong contribution coming from countries like France, the UK and Germany. Reported sales increased by 5.0% to EUR 1,734 million, including a foreign exchange impact of 0.1%. Adjusted EBIT increased organically by 1.9% to EUR 569 million in H1 21, driven by operational leverage which was partly re-invested in A&P and other growth opportunities. Based on a 2-year CAGR, the organic adjusted EBIT growth was 8.9%.

CPG LARMEA

Organic growth was driven by volume/mix and price. The positive volume/mix effect was driven by continued growth in Single Serve and Premium Instants offerings while the positive price effect was driven by price increases across most markets. Whilst most countries contributed to organic sales growth, we saw particularly strong performance in countries like South Africa and Brazil. Reported sales decreased by 9.4% to EUR 446 million, including a foreign exchange impact of -14.8% mainly driven by the depreciation of the Brazilian real and the Russian ruble. Adjusted EBIT decreased organically by -19.2% to EUR 78 million in H1 21, driven by higher A&P spend and other operating expenses. Based on a 2-year CAGR, the organic adjusted EBIT growth was 4.2%.

CPG APAC

The relatively stable organic sales base is the result of a positive volume/mix effect which was offset by a negative price effect. Various markets in this segment entered into new lockdowns in the course of H1 21, which, in many cases, were stricter than the initial lockdowns in 2020, thereby further impacting the Awayfrom-Home businesses. As a result, organic sales performance in various markets in South-East Asia were in decline, while China delivered strong double-digit performance. Reported sales decreased by 1.1% to EUR 323 million, which included a foreign exchange impact of -0.8% mainly related to depreciation of various currencies in South-East Asia. Adjusted EBIT decreased organically by -14.8% to EUR 59 million in H1 21 driven by higher A&P spend to support innovations. Based on a 2-year CAGR, the organic adjusted EBIT growth was 18.9%.

Peet’s

As the U.S. started to re-open in the course of H1 21, consumption patterns started to gradually shift back to the coffee stores. Peet’s CPG business continued to deliver solid single-digit organic sales growth, resulting in a 2-year CAGR of 18.1%. Peet's coffee stores are seeing very encouraging same-store-sales growth of 24% in H1 while the other Away-from-Home channels are still impacted by low returns to offices and universities. Organic growth was mainly driven by volume/mix. Reported sales decreased by -2.8% to EUR 422 million, which included a foreign exchange impact of -9.2% and a scope effect of -1.0% related to the divestiture of non-core assets in 2020. Adjusted EBIT increased organically by 10.8% to EUR 53 million in H1 21, largely driven by the recovery in Away-from-Home and which was partly offset by incremental investments to increase household penetration in CPG. Based on a 2-year CAGR, the organic adjusted EBIT growth was 14.5%.

Out-of-Home

The organic sales decline was driven by volume/mix and partly offset by positive price effect. The Out-of Home segment continued to be impacted by the pandemic as in most of its markets, the COVID situation remained unabated. Reported sales increased by 0.5% to EUR 320 million, including a foreign exchange impact of 0.8% and 0.7% related to a small acquisition in Switzerland. The Out-of-Home segment returned to profitability with an adjusted EBIT of EUR 22 million (compared to EUR -7 million in H1 20) as a result of various structural cost measures that have been implemented since the start of the pandemic.

Alexis Rubinstein