JDE Peet’s has released its mid-2021 report, revealing a growth of 4.2 per cent in organic sales compared to the year prior. These results were supported by double-digit growth in the single-serve and beans sector, and increased “In-Home momentum” which grew by 4.9 per cent.
Within In-Home consumption, e-commerce grew by 30 per cent while JDE Peet’s Away-from-Home market returned to profitability, maintaining a stable sales base which increased by 0.7 per cent over the first half of 2021.
According to JDE Peet’s, further “visible positive reopening effects were seen in [the second quarter]” in the Away-From-Home market.
“I would like to thank all our teams around the world for their perseverance while successfully navigating our company through all the ongoing challenges and complexity and for delivering this strong set of results,” says Fabien Simon, CEO of JDE Peet’s.
“We are pleased with our first-half 2021 results, across all key metrics, including top-line, profitability, cash generation, and in-market performance.”
Total organic sales growth reflected a volume/mix effect of 3.7 per cent and 0.4 per cent in price while changes, such as in scope, decreased sales by 0.2 per cent. Foreign exchange had a negative impact of 3.5 per cent while total reported sales increased by 0.5 per cent to US$3852 million.
Organic adjusted earnings before interest and taxes (EBIT) grew by 0.8 per cent to US$752 million, driven by increased gross profit.
The company’s gross profit margin expanded on 26 basis points which, according to Simon, has enabled the business to “reinvest behind its powerful portfolio of brands and future growth opportunities”. This includes re-investing into marketing, innovations, and growth capabilities.
“In the first half of the year, we also continued to evolve our business portfolio,” says Simon. “We announced partnerships with J.M. Smucker in the US and with Pret a Manger in the UK, the acquisition of Campos in Australia, and the divestment of two small businesses in the Netherlands and France.”
JDE Peet’s also reached a free cash flow of US$654 million, with its net debt reduced to US$5516 million in the first half of 2021.
Underlying profit — excluding all adjusting items net of tax — increased by 13.5 per cent to US$528 million. This was supported by lower interest expenses due to deleveraging, lower average cost of debt, and a reduction of other finance expenses.
The brand also progressed on its sustainability goals in the first half of 2021, stating that during the month of March, the brand refinanced its bank facilities, connecting US$2.9 billion of its investment grade facilities to its sustainability goals.
March also saw JDE Peet’s commit to adopting a Science-Based Target, or a science-based emissions reduction target. This is part of the Science Based Targets initiative (SBTi), a partnership between not-for-profit CDP, the United Nations Global Compact, World Resources Institute, and the World Wide Fund for Nature; which aims to drive climate action in the private sector.
Currently, JDE Peet’s says it is on track to announce a science-based greenhouse gas reduction target through the SBTi in the second half of 2021.
Within manufacturing, the brand says that its facility in Gavle, Sweden was the first to achieve the PAS2060 certification, an internationally recognised certification for carbon neutrality, in March. In June, this certification was expanded to all of JDE Peet’s manufacturing facilities in Europe, seeing the brand achieve a Zero Landfill status for the first time.
According to the report, COVID-19 challenges including repetitive lockdowns have continued to limit the brand’s visibility and predictability regarding the timing and the pace of recovery for its Away-from-Home businesses.
“Within this context, we continue to expect organic sales growth of 3 to 5 per cent in [the 2021 financial year], assuming a gradual recovery in Away-from-Home,” the report says.
“We also continue to expect organic adjusted EBIT to grow in the low single-digit range in [the 2021 financial year], as we step up our investments for growth, notably in marketing and innovation support.”
Simon based on the progress made in the first half of 2021, combined with the brand’s current expectations for the remainder of 2021, JDE Peet’s remains confident that it will reach its outlook for the year.
To read the full report click here.