Coffee group JDE Peet’s posts surprise growth in 2023 operating profit

By Stephanie Hamel and Gaelle Sheehan

(Reuters) -JDE Peet’s, one of the world’s largest coffee companies, on Wednesday reported an organic rise in 2023 operating profit, while analysts had forecast a decline, and said it expected the growth to continue this year.

The maker of coffee brands Jacobs, L’Or, Tassimo and Douwe Egberts posted adjusted earnings before interest and taxes of 1.13 billion euros ($1.22 billion) for 2023, down 8.1% on a reported basis but up 1.1% organically.

That beat analysts’ expectations for a 1.8% organic decline, a company-compiled consensus showed.

In 2022, the group’s adjusted EBIT fell 9.3% organically.

The group, which produces and supplies coffee and tea beverages and coffee machines, sees annual organic sales growth at the lower end of its medium-term guidance range of 3% and 5%, while analysts were expecting 3% growth.

“We are back to our long-term profitability algorithm, excluding Russia’s performance,” CEO Fabien Simon said in a statement.

Excluding activities in Russia, JDE Peet’s operating profit grew more than 6% organically last year.

The company last August said it would stop selling western coffee and tea brands in Russia by the end of the year, and continue selling them only under local brands.

It said at the time that rebranding the Jacobs coffee brand alone for the Russian market had resulted in a 185 million-euro impairment.

In the LARMEA region, which includes Latin America, Russia and the Middle East, adjusted operating profit fell 21.1% organically to 147 million euros in 2023.

For 2024, JDE Peet’s targets mid-single-digit percent organic EBIT growth, excluding Russia, with low single-digit growth in the first half and acceleration in the second.

($1 = 0.9251 euros)

(Reporting by Stéphanie Hamel and Gaëlle Sheehan; editing by Milla Nissi and Sharon Singleton)