Jde Peet'S Nv

Good morning and thank you for joining J.D. Pitt's half-year 2024 earnings call. My name is Caroline and I'll be your operator for today's call. For the duration of the presentation, all participants will be in listen-only mode and the conference call is being recorded. Following the presentation, there will be an opportunity to ask questions. If you do have a question, please press star 1 on your telephone keypad. If you wish to withdraw your questions, you may do by pressing star 2 to cancel. At this time, I would like to turn the call over to our first speaker, Robin Jensen, Director, Investor Relations for JDE Peets. Thank you.

Thank you, Caroline, and good morning, everyone, and welcome to JDE Peets' earnings call related to our financial performance of the first half year of 2024. With me are Luc van der Velde, Interim CEO and Chair of the Board, and Scott Gray, CFO. In a moment, Luc will take you through the operational and financial highlights related to our first half year business performance. After that, Scott will tell you more about the financial performance in the first half, and we'll update you on our outlook for full year 2024. After that, we will be happy to answer your questions. Our press release was published at 7 a.m. CET this morning. The release, as well as a slide deck related to this call, are also available for download from the Investor Relations section on our website. A full transcript of this conference call will also be made available in that same section on our website as soon as possible after this call. Before I hand over to Luc, I would like to direct your attention to the disclaimer regarding non-IFRS measures and forward-looking statements on slide three. We would kindly like to ask you to read this information carefully. And with that, I gladly hand over the call to you, Luc.

Thank you, Robin, and welcome. Thank you for joining us on this earnings call today. I'm very pleased with this strong set of results, which I believe should be a pleasant surprise for all of you. We delivered robust, broad-based performance across top line, profitability, and cash flow, despite operating in a very challenging environment that continues to be characterized by rising green coffee prices and an increasing demand for more affordable offerings from our consumers. Our two recent transactions are now consolidated and the integration and their performance is in line with the acquisition rationale. I'm also pleased with our sustainability program and results are on track as is the search for my successor. Given our strong performance in the first half and our expectations for the remainder of the year, including the ongoing inflation and volatility in green coffee prices, along with the additional pricing that this will require, we are confident in raising our full year outlook across top line profitability and cash flow, which will also enable us to bring down our net leverage to below three times EBITDA within 12 months following the completion of the two recent transactions. As Scott will provide a more detailed overview of our financial performance shortly, I will highlight some of the key financial metrics of the first half of the year. Our organic sales growth was broad-based, particularly driven by our premium products, as I think best illustrated by the performance of both Peet's and L'Or Barista in a US market, which I think you know is experiencing some softness, but both brands are positioned in the premium end of the market and doing very well. Adjusted gross profit was up 9%, also broad-based, with all segments contributing positively. Effective cost control, coupled with a level of AMP that was slightly up organically, resulted in a 17% organic increase in our adjusted EBIT, which supported our strong free cash flow of €315 million, bringing our net leverage down to almost three times adjusted EBITDA. This overall strong performance underscores the strength of our business, bolstered by our multi-channel approach, diverse high-quality product offerings, powerful brands, leading market positions, and the resilience of our organization. So let me, on the next slide, provide you with some of my main observations since I became interim CEO on the 1st of April of this year. Based on the input that I received, the numerous conversations I've had with leadership and others, and my own assessment, I firmly believe that the company is rightly configured and has the right strategic direction even though we can improve our execution, driving short-term performance whilst investing for the long term. We are capable of attracting and retaining high-quality management and talent. However, I think we can also improve our overall performance by fostering greater collaboration and breaking down silos within the organization. Our brands, research and development, and manufacturing facilities are very well invested and state-of-the-art. But there is a need to cultivate a stronger return on investment mindset across all areas, including marketing and R&D. As the leading pure play coffee and tea company, we apply a unique business model with a multi-channel approach, a portfolio of strong brands, and a very diverse product offering satisfying all coffee and tea needs. This model is operated with a lot of local autonomy and accountability in the markets, which drives operating strength, agility, and resiliency. These strong fundamentals position us very well for long-term value creation and to successfully navigate all kinds of challenges. Nonetheless, I've also identified opportunities to better leverage our scale advantage, which could further enhance our performance. And in particular, I believe that our decentralized organization structure has sometimes led to a lack of focus and thinly spread resources instead of leveraging our international scale. As I said earlier, in H1, we have consolidated Maratha's coffee and tea business, as well as the Caribou CPG business. The integration is progressing very well with both delivering results that are in line with expectations and in line with the acquisition rationale. To stay relevant for our consumers and address the evolving needs and preferences, we have continued to launch a diverse range of new product offerings in coffee and tea, of which you can find a few examples on this slide. We're very conscious that our future largely depends on the continued evolution of our product portfolio, and we take great responsibility in maintaining the high quality standards that our customers, our consumers expect from us, whilst also adapting to their changing needs and preferences. Whereas lowering the cost of product by using lower quality coffee blends is very tempting in a high inflationary environment, we take great pride in maintaining or improving our products continuously. I'm also proud to say that we continue to lead in our sustainability journey, as evidenced by the recent accolades from Ecovaris, as highlighted on the bottom of this chart. If you're wondering how we transformed from a laggard to a leader over the last three years, I would attribute it to two things. First of all, the outstanding leadership of Laurent Sagara, our sustainability lead. And importantly, our commitment to measuring everything we do by its environmental impact. So when we, for instance, assess new product offerings like the ones I showed on the previous chart, we not only consider consumer relevance, financial returns, but also how these new products contribute to our sustainability goals to the same extent that return on investment should be as well. And last but not least, I would also like to remind you that in H1, we increased our greenhouse gas emission reduction ambition, increasing our targets to be net zero by 2006. So on to the second half priorities. As far as I am concerned, I'm thoroughly enjoying my role as CEO, as you can imagine. My top priority is to find the right permanent successor. The search and selection process is progressing very well. And I do intend to contract the successor before the end of the year. For the whole organization, secondly, after two to three years of significant and persistent inflation leading to successive price increases, many of our consumers are becoming more focused on affordability. And then at the same time, prices of our green coffee and ocean freight unexpectedly spiked again in H1 of this year. With coffee futures for Abica and Robusta up 13% and 54% respectively versus the same period last year, leading to record high levels for Augusta, for example. The green coffee inflation of the last quarters will hit our P&L in the coming quarters and thus inevitably necessitating additional price in the short term and long term. Therefore, we will remain laser focused on achieving and hopefully even exceeding our increased outlook, which Scott will discuss in a moment. And with that, I'll hand over to Scott, and I'll come back at the time of the Q&A.