Coffee Service

JDE Peet's reports lift in at-home sales, decrease at cafes

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August 10, 2020

Global coffee company JDE Peet's reported a 12% boost in profits and a 2.9% drop in sales for the first half of 2020, with at-home business expanding at the expense of away-from-home business.

The Amsterdam based company, which owns Peet's, Douwe Egberts, Jacobs and other coffee brands, finished the first half of 2020 with 3.23 billion euros ($2.78 billion) in sales, a 2.9% decline over last year's first half, according to its earnings report for the six months ending June 30.

Underlying operating profit rose 12% from 588 million euros ($693.15 million) to 642 million euros ($756.8 million).

Reported adjusted earnings before interest of 642 million euros for the six month period fell short of the 610 million euros ($719 million) that analysts predicted, according to Reuters.

The company's shares have increased 22% to 38.5 euros ($45.38) since listing on the Amsterdam stock exchange in May, one of the largest initial public offerings since the start of the COVID-19 crisis, according to Reuters.

Underlying earnings per share was 0.79 euros (93 cents) while reported earnings per share was 0.44 euros (52 cents), according to the first half earnings report.

"We saw record growth in our in-home CPG business across markets," CEO Casey Keller said during the company earnings call. "That growth largely offset the significant COVID-19 impact on the away-from-home business, which represented about 25% of our sales last year before the pandemic. Our adjusted EBIT performance was very strong behind excellent cost discipline and operating efficiencies, and we continued to reduce debt behind strong cash flow generation during the crisis."

"The shelter-in-place mandates stipulated by governments around the world created extraordinary demand in e-commerce," he said. "Our e-commerce business increased by 63% in the first half, more than doubling since the pandemic lockdowns."

All of the company's single-serve technology — Senseo, Tassimo and aluminum coffee capsules — is growing in the double digits, Keller said, with aluminum capsules growing over 30% since the pandemic began.

By contrast, the away-from-home business fell by 30% in the first half, he said.

April and May were most severely impacted by the lockdown restrictions. By the end of June, however, most coffee stores were open with pick-up, delivery and limited inside service.

Sales for the company decreased by 1.1% on an organic basis, reflecting a volume/mix of 0.9% and 0.2% in price. Net acquisitions increased sales by 0.1% while foreign exchange had a negative impact of 1.8%.

The company expects adjusted EBIT growth for the year will be within its medium to long-term range of 5-8% with increased marketing and promotions in the second half.

For an update on how the coronavirus pandemic is affecting convenience services, click here.