Uncertainty over JDE Peet's Russian activities could cloud 2024 outlook
By Stephanie Hamel and Gaelle Sheehan
(Reuters) -JDE Peet's, the owner of coffee brands such as Douwe Egberts and L'Or, said on Wednesday that new European Union sanctions against Moscow have created uncertainty over the future of its Russian business, with potential impacts on its 2024 guidance.
The Dutch group said in August last year that it would operate its Russian activities as a stand-alone business and only sell local brands.
However, elements of the 12th package of EU sanctions against Russia - taking effect in June - may affect the assessment of who controls those assets, and in turn, impact the company's review for its 2024 financial year onwards, it said in a press release.
"We have taken significant steps which go beyond the requirements mandated by international sanctions," JDE Peet's told Reuters in an email, after reiterating it currently remains in control of its Russian operations.
The company did not clarify how it would be affected by the sanctions.
Moscow took control in July of food and beverage group Danone's Essential Dairy and Plant-based (EDP) subsidiary, for which the group had been seeking a buyer.
The Financial Times reported on Wednesday that a pro-war Russian businessman is planning to take over Danone's Russian assets for 17.7 billion roubles ($191.52 million).
Shares in JDE Peet's fell as much as 6.8% to 21.60 euros in early trading, hitting a record low.
Jefferies analysts noted that uncertainty in Russia "complicated" the company's 2024 outlook.
The group targets mid-single-digit percent organic operating earnings growth in 2024, excluding Russia.
It sees annual organic sales growth at the low end of its medium-term guidance range of 3% and 5%, in line with analysts' expectations.
For 2023, JDE Peet's posted a 1.1% organic increase in adjusted operating earnings to 1.13 billion euros, ahead of analysts' expectations for a 1.8% organic decline.
Excluding activities in Russia, the operating profit grew more than 6% organically.
($1 = 0.9266 euro)
(Reporting by Stéphanie Hamel and Gaelle Sheehan; editing by Milla Nissi, Sharon Singleton and Jonathan Oatis)
