JDE Peet’s, the Dutch coffee company known for brands such as Douwe Egberts, Peet’s Coffee, and L’Or, announced a significant drop in net profit for the first half of this year. The company reported a decrease of 61%, falling short of market predictions. Despite this setback, JDE Peet’s maintained its sales forecast while adjusting its full-year adjusted EBIT guidance.
Transitioning Russian Business Impacts First Half Results
JDE Peet’s decision to transition its Russian business to a local portfolio of brands had notable consequences. The move led to a non-cash impairment of €185 million ($203.2 million) for the Jacobs brand during the first half of the year. As a result, the contribution from Russia is expected to be lower in the second half of the year.
Decline in Net Profit for H1 2020
Comparing the first half of this year to the same period in 2019, JDE Peet’s reported a net profit of €197 million compared to €508 million last year. This figure fell short of the company’s anticipated net profit of €322 million.
Sales Growth, Organic and Otherwise
Despite the decline in net profit, JDE Peet’s experienced growth in sales. On an organic basis, sales rose by 3.5%, reaching €3.99 billion compared to €3.90 billion in the previous year. This growth can be attributed to a price increase of 6.8%, offset by a volume/mix effect of -3.3%. InHome sales increased by 2.2%, while Away-from-Home sales saw an impressive 9.0% increase.
Adjusted EBIT Forecast for FY 2020
Looking ahead to the rest of the year, JDE Peet’s adjusted its EBIT guidance. The company now expects a low single-digit organic decrease or increase for adjusted EBIT, compared to its previous guidance of low single-digit organic growth. However, JDE Peet’s maintained its organic sales growth target at the high end of the medium-term range of 3%-5%.
Adjusted Earnings Before Interest and Taxes
JDE Peet’s preferred metric, adjusted earnings before interest and taxes (EBIT), recorded €581 million for H1 2020, down from €631 million in the same period last year. This metric excludes exceptional and other one-off items.
