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JDE Peet’s Surpasses Expectations with Unexpected 2023 Profit Growth

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JDE Peet’s, a giant in the global coffee scene, has brewed up some surprising news. Despite analysts predicting a bit of a slump, the company has reported organic growth in its operating profit for 2023 and is looking forward to more of the same this year.

JDE Peet’s Profit Growth

The folks behind popular coffee labels like Jacobs, L’Or, Tassimo, and Douwe Egberts have tallied their adjusted earnings before interest and taxes at €1.13 billion ($1.22 billion) for the past year. While this marks an 8.1% dip in reported terms, organically speaking, they’ve actually perked up by 1.1%.

This has pleasantly surprised the experts, who were bracing for a 1.8% organic dip, according to a consensus the company had put together. It’s a significant turnaround from 2022, when the group’s adjusted EBIT took a 9.3% organic hit.

JDE Peet’s, the powerhouse behind a vast array of coffee and tea beverages as well as coffee machines, is eyeing annual organic sales growth sitting at the cosier end of their 3% to 5% medium-term forecast. Analysts had their bets on 3% growth.

CEO Fabien Simon chimed in, saying the company is back on track with its long-term profitability goals, with Russia’s performance taken out of the equation. When you don’t count Russia, JDE Peet’s operating profit actually saw a hearty organic growth of over 6% last year.

Back in August, the company decided to halt the sale of Western coffee and tea brands in Russia by year’s end, opting to sell only under local brands. This move, particularly the rebranding of the Jacobs coffee brand for the Russian market, led to a €185 million impairment.

In the LARMEA region, which spans Latin America, Russia, and the Middle East, adjusted operating profit took a 21.1% organic dive to €147 million in 2023.

Looking ahead to 2024, JDE Peet’s is setting its sights on mid-single-digit percent organic EBIT growth, Russia not included, with expectations for a modest start in the first half and picking up speed as the year progresses.

To sweeten the deal for shareholders, the company’s board is proposing a dividend of €0.70 per share for the 2023 financial year, to be doled out in two €0.35 instalments, with the first payout set for July 12, 2024.

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