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JDE Peet's says coffee lovers can swallow higher prices

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·2-min read
Customers wear masks as they wait in line at a Peet's coffee shop in Encinitas, California
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By Toby Sterling

AMSTERDAM (Reuters) - JDE Peet's , one of the world's largest consumer coffee companies, on Wednesday reported better than expected first-half operating profit, and said it would meet full-year targets despite a spike in green coffee prices after frost struck Brazilian crops last month.

CEO Fabien Simon said green coffee prices had already increased around 20% in 2020 and that the company is also facing increases in transportation and other costs this year -- but it expects to be able to pass those increases on to consumers.

"Despite these inflations, despite incremental inflation which has been coming through the non-coffee side, we are very confident we will deliver our outlook," he said on a call.

He said the size of potential rises is competitive information but the company is now conferring with retailers on how they may be carried out.

"Coffee is pretty unique category in the food and beverage space where headwinds and tailwinds of green coffee are passed through, and we expect that to happen again this time around," he said.

"We feel we have pretty good pricing power across our portfolio."

JDE Peet's, which owns a range of coffee and tea brands including Pickwick, Senseo, Tassimo, TiOra and L'OR, repeated its March forecast for organic sales growth of 3% to 5% for the full year and a "single-digit" increase in adjusted EBIT.

For the first half, adjusted operating profit fell 1% to 636 million euros from the same period a year earlier, above analysts' average forecast of 610 million euros.

JDE said that coffee sales growth for home consumption offset an uneven restart for coffee shops due to the coronavirus pandemic -- though shops, driven by U.S. brand Peet's, had returned to profitability.

Overall sales edged up 0.5% to 3.25 billion euros, with sales for at-home consumption, usually coffee purchased at grocery stores, climbing 4.9% on a like-for-like basis.

The company's shares, which had fallen 20% so far this year, rose by 5.6% to 29.94 by 0928 GMT on Wednesday.

That compares with its listing price of 31.50 euros on the Amsterdam Stock Exchange in May 2020, one of the largest initial public offerings to take place amid the COVID-19 crisis..

($1 = 0.8425 euros)

(Reporting by Toby Sterling; Editing by Edwina Gibbs and Jane Merriman)

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