JDE Peet's tops estimates even as coffee prices bite into profits

By Mathias de Rozario and Mateusz Rabiega

(Reuters) - Coffee and tea company JDE Peet's on Wednesday beat market expectations for 2024 operating profit and forecast a largely expected small decline in the 2025 figure driven by soaring prices of coffee beans.

Its shares rose by more than 8% in early trading, touching their highest price since early November.

JDE Peet's said green coffee prices had more than doubled on average over the past year due to atypical weather patterns, supply chain disruptions and macroeconomic and geopolitical factors, and were not expected to come down in the near future.

The Dutch maker of Jacobs, L'Or, Tassimo and Douwe Egberts brands will try to offset the higher coffee bean costs by price discipline while preserving affordability for customers where possible, it said in a statement.

Its adjusted earnings before interest and taxes (EBIT) grew 13.2% to 1.28 billion euros ($1.34 billion) in 2024, above analysts' consensus of 1.25 billion euros, supported by organic growth and cost discipline across its segments.

The main growth driver was the LARMEA business, the company's second biggest covering Latin America, Russia, Middle East and Africa, with a 21% rise.

"A certain level of uncertainty remains around potential tariffs for green coffee imports into the U.S., following President Trump's ... intent to develop 'reciprocal tariffs' for, amongst others, Brazil," a company spokesperson told Reuters via email.

In Europe, which represents more than half of its sales, rising coffee prices caused push backs from retailers during price negotiations, keeping revenues flat.

"Globally, talks with retailers are progressing well ... We have successfully concluded price negotiations covering over 80% of our total sales and by the end of this week expect this percentage to be above 90%," the spokesperson said.

Analysts said the projected drop in adjusted EBIT was in line with expectations, while KBC Securities highlighted the shift in the company's capital allocation strategy towards shareholder remuneration.

JDE Peet's plans to launch a multi-year share buyback programme of up to 1 billion euros, with up to 250 million euros of purchases in 2025, it said.

It also named Straumann's finance chief Yang Xu as its new chief financial officer. She will succeed Scott Gray, who resigned in late January, in May.

($1 = 0.9531 euros)

(Reporting by Mathias de Rozario and Mateusz Rabiega in Gdansk; Editing by Milla Nissi)