JDE Peet’s reports half-year results 2023

Focus and disciplined execution of strategy, leading to in-market outperformance

PRESS RELEASEAmsterdam, 2 August 2023

Key items1

Organic sales up +3.5% (+2.4% reported), driven by +6.8% price and volume/mix of -3.3%
Organic gross profit up +0.9% and high single-digit growth of advertising spend
Organic adjusted EBIT down -3.0% to EUR 581 million
Free cash flow of EUR 14 million due to normalisation of working capital; net leverage at 2.8x
Underlying EPS of EUR 0.85
FY 23 outlook updated

A message from Fabien Simon, CEO of JDE Peet’s

"In the first half of 2023, we delivered resilient financial performance in a category that is globally adjusting in the aftermath of the pandemic, and coping with persistent inflation. Against this backdrop and despite an industry volume decline in Europe, we delivered mid-single-digit top-line growth, driven by our premium product portfolio, E-commerce acceleration and strong performance in the US and in emerging markets.

We continue to be guided by our renewed strategic framework to become more global, more digital and more sustainable. We are now very pleased to witness the in-market outperformance of JDE Peet's globally from the disciplined execution of our strategic priorities.

In a fast evolving environment, we remain focused and nimble. In the first half of 2023, we have initiated the transition of an omni-channel organisation in Europe, and towards a local portfolio in Russia. In parallel, we will increase our global consumer reach, with the intended acquisition of Maratá's coffee & tea platform in Brazil and the launch of L’OR Barista in the US.

While anticipating an acceleration of our organic sales growth in H2, we expect the business environment to remain volatile. As there is uncertainty of the impact of the transition from international brands to local brands in Russia, we believe it is more appropriate to guide our full year organic adjusted EBIT growth in the range of a low single-digit increase and low single-digit decrease.

The tangible progress of our transformation - brand health, team engagement, gross profit and sustainability, just to name a few - is positioning us well to deliver sustained shareholder returns and societal value."

Broad-based progress made on our strategic Sustainability agenda

In the first half of 2023, we have made good progress against our strategic Sustainability roadmap and multi-year objectives. Our long-term Sustainability agenda is now deeply embedded across the entire organisation and in our strategic decision making. Our carbon accounting system has been rolled out and enables us to track our carbon footprint up to the individual SKU level and allows to have a full view of our carbon reduction performance alongside financial performance.

During this semester, we announced, among others, the intention to launch a new, fully compostable coffee capsule, which allows for an uncompromising high-quality in-cup experience, and we announced the intention to launch a new paper pack for our soluble coffee ranges, which is recyclable and is the first of its kind in the coffee market. Moreover, the coffee from this new paper pack will generate the lowest carbon footprint within our existing range of products.

In addition, JDE Peet's has become a member of the ILO Child Labour Platform, to tackle the root causes of child labour in the coffee supply chain, and we published our Water Stewardship Policy and our Nutrition Policy.

Update on Russia

Since the start of the war, JDE Peet's has sought to ensure that its business in Russia is operated as a stand-alone business to the greatest extent possible. The company has now taken the next step by transitioning to a local portfolio of brands, which resulted in a non-cash impairment of EUR 185 million of the Jacobs brand in H1 23 and is expected to lead to meaningfully lower contribution from Russia in H2 23.

Outlook 2023

JDE Peet's expects the business environment to remain volatile and vulnerable for the remainder of 2023. As there is uncertainty on the impact of the transition from international brands to local brands in Russia, the company now expects to deliver the following for full-year 2023:

Organic sales growth at the high end of its medium-term range of 3 - 5% (unchanged)
Adjusted EBIT to fall within the range of a low single-digit organic increase and a low single-digit organic decline (updated)
Net leverage below 3.0x, with Free Cash Flow of around EUR 400 million, post normalisation of working capital, confirming an ongoing run-rate of EUR 1 bn on a 3-yr average (additional)
A stable dividend (unchanged)

FINANCIAL REVIEW HALF-YEAR 2023

in EUR m (unless otherwise stated)

	6M 2023	6M 2022	Organic change	Reported change
Sales	3,988	3,896	3.5%	2.4%
Adjusted EBIT	581	631	-3.0%	-7.9%
Underlying profit for the period	411	523	-	-21.4%
Underlying EPS (EUR)1, 2	0.85	1.05	-	-19.6%
Reported basic EPS (EUR)2	0.41	1.02	-	-59.8%
1 Underlying earnings (per share) exclude all adjusting items (net of tax)
2 Based on weighted average number of shares outstanding

Total reported sales increased by 2.4% to EUR 3,988 million. Excluding a -1.6% effect related to foreign exchange and 0.4% related to scope and other changes, total sales increased by 3.5% on an organic basis, with 3 out of 4 segments growing between 5% and 10% organically. Organic sales growth reflects a price effect of 6.8% and a volume/mix effect of -3.3%. In-Home sales increased organically by 2.2% and in Away-from-Home by 9.0%, resulting in a 4-yr organic CAGR of 6.7% for In-Home sales and 0.6% for Away-from-Home sales.

Total adjusted EBIT decreased organically by 3.0% to EUR 581 million as an increase in gross profit was offset by an increase in SG&A. Including the effects of foreign exchange and scope changes, adjusted EBIT decreased by 7.9%.

Underlying profit - excluding all adjusting items net of tax - decreased by 21.4% to EUR 411 million. This performance was mainly driven by an unfavourable impact from fair value changes in derivatives and forex and a lower level of operating profit, and includes an underlying effective tax rate of 23.5%.

Net leverage of 2.8x net debt to adjusted EBITDA at the end of H1 23 was kept well below 3.0x, with a net debt of EUR 4.2 billion at the end of H1 23.

Free cash flow was EUR 14 million in the first half of 2023, which was lower than the comparative period in 2022 due primarily to the normalisation of working capital as well as higher capital expenditures.

JDE Peet's' liquidity position remains strong, with total liquidity of EUR 2.2 billion consisting of a cash position of EUR 0.7 billion (excluding restricted cash) and available committed RCF facilities of EUR 1.5 billion.

For the full and original version of the press release click here

CONFERENCE CALL & AUDIO WEBCAST

Fabien Simon (CEO) and Scott Gray (CFO) will host a conference call for analysts and institutional investors at 10:00 AM CET today to discuss the half-year 2023 results. A live and on-demand audio webcast of the conference call will be available via JDE Peet’s’ Investor Relations website. 1This press release contains certain non-IFRS financial measures and ratios, which are not recognised measures of financial performance or liquidity under IFRS. For a reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures, see page 7 of this press release.

ENQUIRIES

Media

Khaled RabbaniMedia@jdepeets.com+31 20 558 1753

Investors & Analysts

Robin JansenIR@jdepeets.com+31 6 1594 4569

About JDE Peet’sJDE Peet’s is the world's leading pure play coffee and tea company, serving approximately 4,200 cups of coffee or tea per second. JDE Peet's unleashes the possibilities of coffee and tea in more than 100 markets with a portfolio of over 50 brands including L’OR, Peet’s, Jacobs, Senseo, Tassimo, Douwe Egberts, OldTown, Super, Pickwick and Moccona. In 2022, JDE Peet’s generated total sales of EUR 8.2 billion and employed a global workforce of more than 20,000 employees. Read more about our journey towards a coffee and tea for every cup at www.jdepeets.com.

IMPORTANT INFORMATION

Market Abuse Regulation

This press release contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

Presentation

The condensed consolidated unaudited financial statements of JDE Peet’s N.V. (the "Company") and its consolidated subsidiaries (the "Group") are prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). In preparing the financial information in these materials, except as otherwise described, the same accounting principles are applied as in the consolidated financial statements of the Group as of, and for, the year ended 31 December 2022 and the related notes thereto. All figures in these materials are unaudited. In preparing the financial information included in these materials, most numerical figures are presented in millions of euro. Certain figures in these materials, including financial data, have been rounded. In tables, negative amounts are shown in parentheses. Otherwise, negative amounts are shown by "-" or "negative" before the amount.

Forward-looking Statements

These materials contain forward-looking statements as defined in the United States Private Securities Litigation Reform Act of 1995 concerning the financial condition, results of operations and businesses of the Group. These forward-looking statements and other statements contained in these materials regarding matters that are not historical facts and involve predictions. No assurance can be given that such future results will be achieved. Actual events or results may differ materially as a result of risks and uncertainties facing the Group. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. There are a number of factors that could affect the Group’s future operations and could cause those results to differ materially from those expressed in the forward-looking statements including (without limitation): (a) competitive pressures and changes in consumer trends and preferences as well as consumer perceptions of its brands; (b) fluctuations in the cost of green coffee, including premium Arabica coffee beans, tea or other commodities, and its ability to secure an adequate supply of quality or sustainable coffee and tea; (c) global and regional economic and financial conditions, as well as political and business conditions or other developments; (d) interruption in the Group's manufacturing and distribution facilities; (e) its ability to successfully innovate, develop and launch new products and product extensions and on effectively marketing its existing products; (f) actual or alleged non-compliance with applicable laws or regulations and any legal claims or government investigations in respect of the Group's businesses; (g) difficulties associated with successfully completing acquisitions and integrating acquired businesses; (h) the loss of senior management and other key personnel; and (i) changes in applicable environmental laws or regulations. The forward-looking statements contained in these materials speak only as of the date of these materials. The Group is not under any obligation to (and expressly disclaim any such obligation to) revise or update any forward-looking statements to reflect events or circumstances after the date of these materials or to reflect the occurrence of unanticipated events. The Group cannot give any assurance that forward-looking statements will prove correct and investors are cautioned not to place undue reliance on any forward-looking statements. Further details of potential risks and uncertainties affecting the Group are described in the Company’s public filings with the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) and other disclosures.

Market and Industry Data

All references to industry forecasts, industry statistics, market data and market share in these materials comprise estimates compiled by analysts, competitors, industry professionals and organisations, of publicly available information or of the Group's own assessment of its markets and sales. Rankings are based on revenue, unless otherwise stated.

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