Sapporo Holdings Limited · TSE:2501
Sapporo — FY2023 Earnings Presentation
57 slides from Sapporo's earnings presentation, Feb 14, 2024
Slide 1: Sapporo Group Business Results for 2023 / Management Plan for 2024
Sapporo Group Business Results for 2023 Management Plan for 2024 *In this document, the name abbreviations are used: February 14th 2024 SH: Sapporo Holdings Limited SB: Sapporo Breweries Ltd. SLN: Sapporo Lion Limited. URL https://www.sapporoholdings.jp/en/ PS: Pokka Sapporo Food & Beverage Ltd. SRE
Slide 2: Agenda
１. Summary ・・・ P.3 ２. Progress of the Medium-Term Management Plan ・・・ P.4~6 ３. Medium- and Long- Term Management Policies for Increasing Group-wide Corporate Value ・・・ P.7~P.13 ４. Financial results for fiscal year 2023 ・・・ P.14~P.19 ５. Management plan for fiscal year 2024 ・・・ P.20~P.42 ６. Appendix ・
Slide 3: Summary
Summary 2023 financial results: Off to a good start in the first year of the Medium-Term Management Plan ⚫ Steady implementation of beer strengthening and structural reforms, increased revenue and profit, and achievement of the plan for the year ⚫ With regard to capital efficiency, promotion of bala
Slide 4: Progress of the Medium-Term Management Plan
Progress of the Medium-Term Management Plan Copyright, 2024 SAPPORO HOLDINGS LTD. All rights reserved. 4/57
Slide 5: Progress of the Medium-Term Management Plan - Achieving the Plan by 2026
Progress of the Medium-Term Management Plan -Achieving the Plan by 2026- Steady start to achieve ROE of 8% by 2026 To transform the business structure and achieve new growth, 2024 is the year to set structural reform goals and solidify the foundation 2024 ROE Set structural reform goals and 8.0% inv
Slide 6: Progress of the Medium-Term Management Plan - 2023 Results
Progress of the Medium-Term Management Plan -2023 Results- In 2023, we worked toward future growth while steadily implementing initiatives for structural reforms Main results of structural reforms Alcoholic Beverages Food & Soft Drinks Restaurants (Business portfolio) (Asset reduction) （Japan） （Japa
Slide 7: Medium- and Long-Term Management Policies for Increasing Group-wide Corporate Value
Medium- and Long- Term Management Policies for Increasing Group-wide Corporate Value Copyright, 2024 SAPPORO HOLDINGS LTD. All rights reserved. 7/57
Slide 8: Recognition of Challenges and Strengths
Recognition of challenges and Strengths Challenges Strengths Low capital profitability ✓ High quality and brand power of beer • The diversified business portfolio has caused scattered resources and issues of intra-group competition relating to growth investments. ✓ Product development and production
Slide 9: Sapporo Group's Vision for the Future
Sapporo group’s vision for the future The Company will further concentrate its management resources to focus on beer businesses with competitive advantages and businesses in which synergies with those competitive businesses can be created. ➢ Specialize in Sapporo brand ➢ Expand export business ➢ Con
Slide 10: Management Policy of the Alcoholic Beverages Business
Management policy of the alcoholic beverages business The Company develops its market-creation capabilities in alcoholic beverages, which has been the Company’s DNA since its foundation and grows our beer business. Alcoholic beverages business Japanese beer business Overseas beer business New market
Slide 11: Organizational Management Policy
Organizational Management policy Redesign group’s organizational structure and organizational operation to accelerate capability of transformation. ➢ The Company will consider the new organizational structure as a business group centered on Organization alcoholic beverages business (i.e. a business
Slide 12: Financial Management Policy
Financial Management policy The Sapporo Group recognizes increasing capital efficiency as one of our key challenge and aims to achieve an ROE of 10% or higher. ✓ The Company will also adopt ROIC as an internal indicator to thoroughly conduct strict criteria of business continuity based on business-s
Slide 13: (Reference) Points Changed and Unchanged
(Reference) Points to be changed (ahead of the current Medium- Points that remain unchanged Term Management Plan) ✓Creation of high-quality products that are loved by beer ✓Change from the collection of alcoholic beverages / food & fans non-alcoholic beverages / real estate businesses to a corporate
Slide 14: Business Results for 2023
Business Results for 2023 Copyright, 2024 SAPPORO HOLDINGS LTD. All rights reserved. 14/57
Slide 15: Financial Highlights
Financial Highlights 2022 2023 YoY changes YoY changes （billions of yen） Result Result (amount) (%) Revenue 478.4 518.6 40.2 8.4% Revenue（Excluding liquor tax） 364.2 400.8 36.5 10.0% Overseas revenue 102.2 119.6 17.4 17.0% EBITDA 29.9 36.0 6.1 20.6% Core operating profit 9.3 15.6 6.3 67.9% Core oper
Slide 16: Financial Highlights by Segment
Financial Highlights YoY YoY YoY YoY 2022 2023 2022 2023 （billions of yen） changes changes （billions of yen） changes changes Result Result Result Result (amount) (%) (amount) (%) Revenue by Segment 478.4 518.6 40.2 8.4% Core Operating Profit by Segment 9.3 15.6 6.3 67.9% Alcoholic Beverages 334.6 37
Slide 17: Financial Highlights: Revenue
Financial Highlights Revenue increased by 40.2 billion yen (+8.4%) driven by the alcoholic beverages business For Japan alcoholic beverages, in addition to the strong performance of beer and RTD, the price revision effect contributed to increased sales The primary factors for increased revenue were,
Slide 18: Financial Highlights: Core Operating Profit
Financial Highlights Profit increased by 6.3 billion yen (+67.9%) due to increased revenue and the effect of structural reforms Increased revenue in the Japan alcoholic beverages business and the effect of structural reforms on the restaurant business and Japan food & soft drinks business steadily c
Slide 19: Financial Highlights: Assets and Liabilities
Financial Highlights Although assets were reduced by 15.5 billion yen through asset-light initiatives, including the sale of assets held and cross- shareholdings, total assets increased by 24.5 billion yen from the end of the previous fiscal year due to overseas growth investments. ★Contents of asse
Slide 20: Management Plan for 2024
Management Plan for 2024 Copyright, 2024 SAPPORO HOLDINGS LTD. All rights reserved. 20/57
Slide 21: Main Progress Toward Business Portfolio Transformation and Strategy Update
Main progress toward business portfolio transformation and business strategy update Business portfolio presented in the Medium-Term Management Plan ⚫ Main progress toward business portfolio transformation (1) Business liquidation Resolution to dissolve Anchor and transfer the plant-based yogurt busi
Slide 22: Figures Based on the Plan's Assumptions
Figures based on the plan’s assumptions ⚫ Higher costs, such as surging raw material costs Costs are expected to increase by ¥6.5 billion vs. 2023, but price revisions implemented through last year will absorb this increase. Respond to the risk of additional cost increases by closely monitoring the
Slide 23: Group Management Plan 2024
Group Management Plan 2024 2023 2023 YoY changes YoY changes （billions of yen） Result Plan (amount) (%) Revenue 518.6 523.5 4.9 0.9% Revenue（Excluding liquor tax） 400.8 407.6 6.8 1.7% Overseas revenue 119.6 124.4 4.8 4.0% EBITDA 36.0 40.7 4.7 13.0% Core operating profit 15.6 19.0 3.4 21.5% Core oper
Slide 24: Group Management Plan 2024 - Financial Targets
Group Management Plan 2024 ～Financial Targets～ 【Financial Targets】 Targets for 2026 have not been changed since the Medium-Term Business Plan was formulated 2022 Result 2023 Result 2024 Plan 2026 Target ROE 3.3% 5.0% 5.5% 8.0% (Approximation) Core operating profit ※ 9.3billion yen 15.6billion yen 19
Slide 25: Group Management Plan 2024 by Segment
Group Management Plan 2024 YoY YoY YoY YoY 2023 2024 2023 2024 （billions of yen） changes changes （billions of yen） changes changes Result Plan Result Plan (amount) (%) (amount) (%) Revenue by Segment 518.6 523.5 4.9 0.9% Core Operating Profit by Segment 15.6 19.0 3.4 21.5% Alcoholic Beverages 376.9
Slide 26: Group Management Plan 2024 - Target for Core Operating Profit
Group Management Plan 2024 ～Target for core operating profit～ 【Target for core operating profit】 Targets for 2026 have not been changed since the Medium-Term Business Plan was formulated 2022 Result 2023 Result 2024 Plan 2026 Target Alcoholic beverages in Japan 3.5% 5.3% 5.7% 5.7% Alcoholic beverage
Slide 27: Group Management Plan 2024: Revenue
Group Management Plan 2024 Aim for an increase in sales of 4.9 billion yen (+0.9%) by focusing on beer, our strength, and achieving growth overseas Strengthening of beer ,RTD in Japan alcoholic beverages, growth of SPB in overseas alcoholic beverages, and sales channel expansion in Malaysia in overs
Slide 28: Group Management Plan 2024: Core Operating Profit
Group Management Plan 2024 Profit increased by 3.4 billion yen (+21.5%) due to increased revenue and the effect of synergies of overseas alcoholic beverages Profit for Japan alcoholic beverages increased due to an increase in the marginal profit of beer , RTD, despite an increase in fixed costs due
Slide 29: Business Strategies: Action Plan
Business Strategies：Action Plan Plan to steadily disclose On slides after page 30, we have included further explanations for action plan numbers (1-1) through (10) details of action plan 2023 2024 2025 to 2026 Japan alcoholic Increase beer sales(1-1) ★ Alcohol tax revisions ★ Alcohol tax revisions b
Slide 30: Business Strategies: Alcoholic Beverages - Japanese
Business Strategies：Alcoholic Beverages ～Japanese～ 2023 2024 Revenue：268.3billions of yen（YoY+22.9billions of yen、＋9.3%） Revenue：270.0billions of yen（YoY+1.7billions of yen、＋0.6%） Core operating profit：14.2billions of yen（YoY+5.7billions of yen、＋67.5% ） Core operating profit：15.5billions of yen（YoY+
Slide 31: Business Strategies: Alcoholic Beverages - Japanese (RTD)
Business Strategies：Alcoholic Beverages ～Japanese～ 2023 2024 Increase RTD sales (1-2) RTD achieved record high sales due to growth of key brands Aiming for further growth by strengthening key brands and proposing new products ✓ RTD (cans) total % YoY (sales amount basis) ✓ RTD (cans) total % vs. 202
Slide 32: Business Strategies: Alcoholic Beverages - Overseas
Business Strategies：Alcoholic Beverages ～Overseas～ 2023 2024 Supplement: Increasing/decreasing factors of the Q4 Revenue：88.6billions of yen（YoY+14.6billions of yen、＋19.8%） core operating profit Revenue：90.0billions of yen（YoY+1.4billions of yen、＋1.6%） Profit increase due to improvement of logistics
Slide 33: Business Strategies: Alcoholic Beverages - Restaurant
Business Strategies：Alcoholic Beverages ～Restaurant～ 2023 2024 Revenue：20.0billions of yen（YoY+4.7billions of yen、＋30.4%） Revenue：20.0billions of yen（YoY+0.0billions of yen、＋0.2%） Core operating profit：2.1billions of yen（YoY+2.6billions of yen） Core operating profit：1.8billions of yen（YoY(0.3)billio
Slide 34: Business Strategies: Food & Soft Drinks - Japanese
Business Strategies：Food & Soft Drinks ～Japanese～ 2023 2024 Revenue：93.5billions of yen（YoY(4.8)billions of yen、(4.9)%） Revenue：92.0billions of yen（YoY(1.5)billions of yen、(1.6)%） Core operating profit：2.2billions of yen（YoY+1.4)billions of yen、+174.3%） Core operating profit：2.2billions of yen（YoY+0
Slide 35: Business Strategies: Food & Soft Drinks - Overseas
Business Strategies：Food & Soft Drinks ～Overseas～ 2023 2024 Revenue：26.4billions of yen（YoY+1.9billions of yen、+7.5%） Revenue：28.0billions of yen（YoY+1.6billions of yen、+5.9%） Core operating profit：(0.6)billions of yen（YoY+1.5billions of yen） Core operating profit：1.3billions of yen（YoY+1.9billions
Slide 36: Business Strategies: Real Estate
Business Strategies：Real Estate 2023 2024 Revenue：21.7billions of yen（YoY+1.0billions of yen、+4.7%） Revenue：23.5billions of yen（YoY+1.8billions of yen、+8.3%） Core operating profit：5.8billions of yen（YoY(0.7)billions of yen、(10.5)%） Core operating profit：5.8billions of yen（YoY+0.0billions of yen、+0.3
Slide 37: Action Plan KPI
Action Plan KPI ※1 Forex assumption: ¥130 2022 results 2023 results 2024 Plan medium-term ※2 Local currency basis (Singapore dollar) plan Target Japan alcoholic Reinforcement of Beer / Improving Profitability of Beer-type Bev. beverages Increase beer sales: share of beer sales（1-1） 68% 73% 79% 79% +
Slide 38: Financial Strategy: Progress in Cash Allocation
Financial strategy: progress in cash allocation Securement of financial flexibility to prepare for growth investment opportunities by reviewing investment policy and strengthening balance sheet management in the Real Estate business ■ 4-year cash allocation (planned for 2023-2026) Progress of shareh
Slide 39: Reference: Cash Allocation Changes from the Medium-Term Plan
Reference) Financial Strategy: progress in cash allocation_changes from the Medium-Term Management Plan Cash allocation policy as indicated in the Medium-Term Management Plan (2023-26) Review of the investment policy ・Control of investment in the Real Estate business in light of the impact of ■ 4-ye
Slide 40: Sustainability Management Initiatives
Sustainability management initiatives Implementation of specific actions in line with priority issues set from the perspective of relevance to each business, degree of impact on society and the environment, and degree of impact on the Company's finances. Contributing to the wellbeing of people and c
Slide 41: Sustainability Management Initiatives
Sustainability management initiatives Click here to learn more about our sustainability-related priorities, goals, and progress Harmony with the environment Co-prosperity with society Sapporo Group and House Foods begin joint transportation between Kita-Kanto and Osaka Expansion of regional developm
Slide 42: Initiatives to Strengthen Governance
Initiatives to strengthen governance Governance Enhanced monitoring: through appropriate monitoring, we have enhanced our ability to execute on our plans Monitoring by the Board of Directors Decision making and business execution by execution side <Review of business portfolio annually> <Progess man
Slide 43: Appendix
Appendix Copyright, 2024 SAPPORO HOLDINGS LTD. All rights reserved. 43/57
Slide 44: Management Conscious of Cost of Capital and Stock Price
Promotion of management that is conscious of cost of capital and stock price While the P/B ratio is above 1.0, we recognize that the current ROE level does not sufficiently exceed the cost of shareholders’ equity as required by the market Change in P/B ratio - Past 10 years Change in ROE - Past 10 y
Slide 45: Management Conscious of Cost of Capital and Stock Price: Policy
Promotion of management that is conscious of cost of capital and stock price To promote a financial strategy that emphasizes "sustainable growth" and "capital efficiency," which we have been working on for some time, and to achieve an increase in corporate value Policy - Aim to achieve Medium-Term M
Slide 46: Improvement of Corporate Value
Promotion of management that is conscious of cost of capital and stock price Promotion of initiatives to improve capital profitability as well as initiatives to reduce the cost of capital Main initiatives Reshuffling of business Exit businesses that cannot be expected to improve and focus on Improve
Slide 47: Status of the Income Statement
Status of the income statement ・Revenue and all profit categories achieved the plan announced at the beginning of the year ・Core operating profit and operating profit did not meet the revised forecast, but revenue and net profit did 2023 2023 Changes 2023 Changes （billions of yen） Result Initial Pla
Slide 48: Balance Sheets
Balance Sheets （billions of yen） Total assets End of 2022 End of 2023 Change Total liabilities and equity End of 2022 End of 2023 Change Cash and cash equivalents 15.4 17.2 1.8 Trade payables 35.7 38.7 3.0 Trade receivables 96.6 98.0 1.4 Short-term financial liabilities 86.5 39.7 (46.9) Inventories
Slide 49: Status of Each Cash Flow
Status of Each Cash Flow （billions of yen） 2022 2023 Change Change (%) CF from operating activities 7.8 45.4 37.6 481.6% CF from investing activities (46.1) (16.4) 29.7 ー ＜Investment total（①＋②）＞ billion Free CF (38.3) 29.0 67.3 ー CF from financing activities 36.5 (27.1) (63.6) ー ➀ Capital expenditur
Slide 50: Alcoholic Beverages Data
Alcoholic Beverages Data ※1：:Following the agreement of the Brewers Association of Japan, Japanese there is no disclosure of the sales volume for the first quarter. The sales volume for the first half and end of the fiscal year shall be disclosed. (10,000 cases) YoY Sales Volume:Beer (Japan) (※1) 20
Slide 51: Alcoholic Beverages Data
Alcoholic Beverages Data Japanese ＜ Jan- Dec sales revenue ＞ (billions of yen) （billions of yen） YoY Sales:Beer (Japan) 2022 2023 Change(%) Beer 145.2 162.7 12.0% Happoshu 5.9 5.9 1.2% New genre 41.5 37.7 (9.2%) Beer, happoshu, and new genre 192.6 206.3 7.1% RTD 22.3 26.7 19.8% Domestic wines 3.4 3.
Slide 52: Alcoholic Beverages Data: Liquor Tax
Alcoholic Beverages Data Japanese ＜Changes in the amount of liquor tax per 350 ml＞ （yen） 77 70 63.35 Beer ✓ Beer and Beer 54.25 Happoshu type beverages 46.99 yen New genre RTD 37.8 35 ✓ RTD 28 yen 2020 2023 2026 （year） Copyright, 2024 SAPPORO HOLDINGS LTD. All rights reserved. 52/57
Slide 53: Alcoholic Beverages Data: Overseas
Alcoholic Beverages Data Overseas (10,000 cases) YoY Sales Volume:Beer (International) 2022 2023 Change(%) Overseas brand (※1) 1,457 1,585 8.8% Sapporo brand 418 433 3.6% ①North America 1,876 2,019 7.6% Sapporo brand 243 282 16.4% ②Other areas 243 282 16.4% Total（①＋②） 2,118 2,301 8.6% Sapporo brand
Slide 54: Alcoholic Beverages Data: Restaurants
Alcoholic Beverages Data Restaurants ＜Composition of Restaurants by Format＞ YoY Restaurants 2022 2023 Change(%) Revenue （billions on yen） 15.3 20.0 30.4% Number of Restaurants 140 130 (7.1%) ＜Trend in Revenue of Restaurants Business 130Outlets and Number of Restaurants＞（Jan-Dec） （billions of yen） （R
Slide 55: Food & Soft Drinks Data
Food & Soft Drinks Data Japanese （billions of yen） YoY Sales:Food & Soft Drinks (Japan) (※1) 2022 2023 Change(%) Soft Drinks 61.0 56.9 (6.9%) Food（Lemon・Soups・Plant milk) 32.9 30.3 (7.9%) ※1：Only domestic sales(Before Rebate subtracted from sales) ＜ Japanese soft drinks POKKA SAPPORO Food & Beverage
Slide 56: Real Estate Data
Real Estate Data Real Estate ＜ Information about Investment property ＞ (billions of yen) ＜ Major rental properties & occupancy rates：（Averages for 2023)> 400.0 Occupa Site area Floor area 300.0 ncy rate No. of floors （㎡） （㎡） （%） 200.0 382.9 385.7 40 floors above ground, Yebisu Garden Place（1） 56,943
Slide 57: Closing statement and disclaimer
As an intrinsic part of people's lives, Sapporo will contribute to the evolution of creative, enriching and rewarding lifestyles. This document was prepared for the purpose of providing information to serve as a reference for investors in making investment decisions and not for the solicitation of i