JDE Peet’s says coffee lovers can swallow higher prices

AMSTERDAM, Aug.4 (Reuters) – JDE Peet’s (JDEP.AS), one of the world’s largest consumer coffee companies, on Wednesday reported better than expected operating profit for the first half of the year, and said that ‘it would meet its targets for the entire year despite a spike in green coffee prices after frost hit Brazilian crops last month.

CEO Fabien Simon said green coffee prices have already risen by around 20% in 2020 and the company is also facing increased transportation costs and other costs this year, but expects to be able to pass these increases on to consumers.

“Despite these inflations, despite the incremental inflation that has occurred on the non-coffee side, we are very confident in achieving our outlook,” he said on a call.

He said the scale of the potential increases was competitive information, but the company is now discussing with retailers how they can be achieved.

“Coffee is a pretty unique category in the food and beverage space where the headwinds and tailwinds of green coffee are passed through, and we expect that to happen again this time around,” he said. -he declares.

“We think we have pretty good pricing power across our portfolio.”

JDE Peet’s, which owns a range of coffee and tea brands including Pickwick, Senseo, Tassimo, TiOra and L’OR, reiterated its March forecast for organic sales growth of 3% to 5% across the board. year and a “single digit” increase in adjusted EBIT.

In the first half, adjusted operating income fell 1% to 636 million euros compared to the same period a year earlier, above the average analyst forecast of 610 million euros.

JDE said the growth in sales of coffee for home consumption was making up for an uneven restart of cafes due to the coronavirus pandemic – although stores, led by American brand Peet’s, have returned to profitability.

Overall sales increased 0.5% to 3.25 billion euros, with consumer home sales, typically coffee purchased from grocery stores, increasing 4.9% on a like-for-like basis.

Shares of the company, which had fallen 20% so far this year, rose 5.6% to 29.94 on Wednesday at 9:28 a.m. GMT.

This compares to its listing price of 31.50 euros on the Amsterdam Stock Exchange in May 2020, one of the largest initial public offerings to take place amid the COVID-19 crisis. .

($ 1 = 0.8425 euros)

Reporting by Toby Sterling; Editing by Edwina Gibbs and Jane Merriman

Our Standards: The Thomson Reuters Trust Principles.