JDE Peet’s, one of the world's largest coffee companies, lowered its annual earnings target, saying the impact of a decision to stop selling its international brands in Russia was uncertain.
The group, which owns the Kenco and Jacobs coffee brands as well as Pickwick tea, is still active in Russia and has manufacturing units near Saint Petersburg and in Novosibirsk, but is working on establishing the business as a stand-alone operation.
'Resilient Financial Performance'
CEO of JDE Peet’s, Fabien Simon said, "In the first half of 2023, we delivered resilient financial performance in a category that is globally adjusting in the aftermath of the pandemic, and coping with persistent inflation.
"Against this backdrop and despite an industry volume decline in Europe, we delivered mid-single-digit top-line growth, driven by our premium product portfolio, E-commerce acceleration and strong performance in the US and in emerging markets."
JDE Peet's set a new range for its full-year organic adjusted earnings before interest and tax (EBIT) forecast of between a low single-digit decline and a low single-digit increase from last year's €1.23 billion ($1.35 billion).
It had previously guided for low single-digit growth.
The company reported €581 million in adjusted EBIT for the half year, down 3% from last year's period, but beating analysts' forecasts of €552 million. Sales grew organically 3.5% to €3.99 billion.
'Results Were Better Than Feared'
'The results were better than feared and the FY23 guidance revision is (again) not significant,' said Credit Suisse Research analysts in a note to clients.
Barclays analysts highlighted 'encouraging' business development in America, outside the United States, but also pointed to a 'miss' from JDE's European business.
'The transition to local brands makes sense as they don't want to damage their international brand portfolio profile,' Barclays commented on the shift in JDE's Russian business.
However, they added that the move gave rivals an opportunity to take market share amidst growing competition.
JDE's rebranding of its Jacobs coffee brand in Russia resulted in an impairment of €185 million in the first half of the year, it said, adding that revenue contributions from Russia will be 'meaningfully lower' in the second half.
Sales in Ukraine grew strongly in the first half, JDE said.
Article by Reuters, additional reporting by ESM.
