Sapporo Holdings Limited · TSE:2501

Sapporo — FY2019 Earnings Presentation

59 slides from Sapporo's earnings presentation, Feb 13, 2020

  1. Slide 1: Sapporo Group Business Results for 2019, Management Plan for 2020

    Sapporo Group Business Results for 2019 Management Plan for 2020 February 13th 2020 URL https://www.sapporoholdings.jp/en/ Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved. 1/59

  2. Slide 2: Agenda

    １．Group Management Plan 2024 ・・・P3~P13 ２．Management Plan for 2020 ・・・P14~P28 ３．Business Results for 2019 ・・・P29~P43 ４．Appendix ・・・P44~P59 Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved. 2/59

  3. Slide 3: Group Management Plan 2024

    Group Management Plan 2024 Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved. 3/59

  4. Slide 4: Formulation of Group Management Plan 2024

    First Medium-Term Management Plan: Revision Formulation of Group Management Plan 2024 The Company has been promoting the “First Medium-Term Management Plan (2017-2020)” under the Long-Term Management Vision “SPEED150,” which covers the period up to the year 2026, the 150th anniversary of the Company

  5. Slide 5: First Medium-Term Management Plan: Reflection

    First Medium-Term Management Plan: Reflection While we achieved a certain level of success in transitioning toward a growth stage in line with the theme “Transform with unprecedented speed,” many issues also remained. We judged that it would be difficult to sufficiently address these issues by conti

  6. Slide 6: Group Management Plan 2024: Basic Policy

    Group Management Plan 2024: Basic Policy  Focus management resources on beer business Focus on core business  Scale down/withdraw from low-return business and shift to food and build resilience and other growth fields  Transfer all overseas business to operating companies, and deploy a consistent

  7. Slide 7: Management System Organized in Line with Operating Companies

    Management System Organized in Line with Operating Companies Transferred North American alcoholic beverages operating company to Sapporo Breweries Ltd., restructured the Food & Soft Drinks segment Holding Business Operating company Affiliates under management of operating companies company Domestic

  8. Slide 8: Strengthening Corporate Governance

    Strengthening Corporate Governance Transition to “Company with Audit and Supervisory Committee”  Pursue further enhancements to corporate value by further enhancing corporate governance and Aim enabling responsive decision-making through more efficient management.  The transition is scheduled to b

  9. Slide 9: Promotion of Sustainability Management

    Promotion of Sustainability Management Towards realizing a decarbonized circular economy based on co-existence with nature 1. Decarbonization initiatives Sustainability Policy - Aim to reduce CO2 emissions at Sapporo Group companies in Japan and overseas by 20% by 2030 (compared to 2013 levels), and

  10. Slide 10: Basic Strategy: Alcoholic Beverages

    Group Management Plan 2024: Basic Strategy [Alcoholic Beverages]  Increase domestic beer market share  Enhance presence in North America  Turn the changes in Japan’s beer market caused by unification of liquor taxes into opportunities  Redefine the values offered to customers (premium and reason

  11. Slide 11: Basic Strategy: Food & Soft Drinks

    Group Management Plan 2024: Basic Strategy [Food & Soft Drinks]  Create next-generation business fields using plant- based materials  Strengthen soy beans and chilled products, soup, and lemon businesses  Restructure low-return businesses  Create new categories of next-generation plant-based mat

  12. Slide 12: Basic Strategy: Real Estate

    Group Management Plan 2024: Basic Strategy [Real Estate]  Maintain stable cashflow creation foundation  Proactive investment in new properties  Develop into high-return business model  Enhance value of Ebisu area centered on Yebisu Garden Place  Improve profitability of Sapporo Factory, promote

  13. Slide 13: Financial Goals and Policy

    Group Management Plan 2024: Financial Goals and Policy [Financial goals] Achieve ¥30 billion core operating profit in 2024 <Core operating profit> (billion yen) Core operating profit: Revenue - Cost of sales – SG&A expenses 35 350 30 300 ¥30 billion <Key indicators> 2% or more (annual 25 Revenue gro

  14. Slide 14: 2020 Management Plan

    2020 Management Plan Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved. 14/59

  15. Slide 15: Review of 2019: Results

    Review of 2019 [Results] Continued to strengthen core brands; profitability of the alcoholic beverages business in Vietnam improved further ＋ % 3 ＋ 29% Sales volume of Black Label Sales volume increase led by 99.99 (cans) increased for the fifth (Four Nines) consecutive year. Sales volume of Black L

  16. Slide 16: Review of 2019: Issues

    Review of 2019 [Issues] Consider future actions while closely studying market trends ( %)4 ( 11%) The canned coffee market Though sales volume was strong continues to shrink due to the following the relaunch in August, emergence of convenience store full-year performance was down coffee and coffee b

  17. Slide 17: Review of 2019: Year of Change

    Review of 2019 Positioned 2019 as a year of change and promoted business/organizational restructuring <Issues> <Measures and results> Sort out policies for North  Sale of Country Pure Foods American soft drinks ➡ Controlled future risks, shifted resources to North American alcoholic business bevera

  18. Slide 18: Key Initiatives in 2020: Alcoholic Beverages

    Key Initiatives in 2020 [Alcoholic Beverages]  Beer  New genre Establish diverse portfolio Two-pillar Mugi to Hop and GOLD STAR strategy Strengthen touch points  RTD  North America Promote in both household and commercial Cost structure reform, markets and establish position as drinks to be resp

  19. Slide 19: Key Initiatives in 2020: Food & Soft Drinks

    Key Initiatives in 2020 [Food & Soft Drinks]  Soft drinks  Lemon-based products Japan: Improve vending machine Expand general demand for lemon-based profitability products through promoting their value Overseas: Expand export business  Soup  Soy beans and chilled products Revitalize Jikkuri Koto

  20. Slide 20: Key Initiatives in 2020: Real Estate, Head Office

    Key Initiatives in 2020 [Real Estate] [Head Office]  Promotion of urban development  Improve efficiency of back office operations Acquire properties in key areas Sapporo Holdings to be left only with (Ebisu and Sapporo) and governance, operating company support, and surrounding areas management re

  21. Slide 21: Change in Handling of Food & Soft Drinks Business in Disclosures

    Change in Handling of Food & Soft Drinks Business in Disclosures Following changes in disclosures due to the sale of Country Pure Foods <Before> <After> Alcoholic Beverages Alcoholic Beverages Japan/Asia Japan/Asia North America North America Abolition of sub- Continued Restaurants Restaurants segme

  22. Slide 22: Management Plan

    Management Plan YoY changes （billions of yen） 2019 2020(Plan) (amount/%) Revenue（Including liquor tax） 491.9 504.4 12.5 2.5% Revenue（Excluding liquor tax） 371.1 384.1 13.0 3.5% Overseas revenue to total （Excluding liquor tax） 16.3% 16.3% (0.1%) - EBITDA 36.0 38.1 2.2 6.0% Core operating profit 11.7

  23. Slide 23: Revenue target

    Revenue target YoY changes YoY changes （billions of yen） 2019 2020(Plan) (amount) (%) Revenue by Segment 491.9 2.5% Alcoholic Beverages 330.2 2.0% Japan & Asia 254.7 4.6 1.8% North America 48.3 2.4 5.1% Restaurants 27.3 (0.6) (2.0%) Food & Soft Drinks 136.9 4.0% Real Estate 24.7 2.6% Other 0.2 (0.1)

  24. Slide 24: Main Factors Contributing to Changes in Revenue

    Main Factors Contributing to Changes in Revenue We will focus on new genre products in the Alcoholic Beverages business and soy beans = Increase and chilled products, soup, and lemon in the Food & Soft Drinks business and aim to = Decrease increase revenue Alcoholic Beverages Food & Soft Drinks Real

  25. Slide 25: Core Operating Profit target

    Core Operating Profit target YoY changes YoY changes （billions of yen） 2019 2020(Plan) (%) (amount) Core operating Profit by Segment 11.7 19.7% Alcoholic Beverages 8.5 7.6% Japan & Asia 8.0 0.0 0.0% North America 0.2 0.5 270.2% Restaurants 0.4 0.0 10.8% Food & Soft Drinks (0.5) - Real Estate 10.7 3.

  26. Slide 26: Main Factors Contributing to Changes in Core Operating Profit

    Main Factors Contributing to Changes in Core Operating Profit Both the Alcoholic Beverage and Food & Soft Drinks businesses aim to increase profits by growing revenue. = Increase North American alcoholic beverages will work on cost structure reform and aim to = Decrease improve profitability. Alcoho

  27. Slide 27: Profit attributable to owners of parent

    Profit attributable to owners of parent （billions of yen） 2019 （Details） 2020(Plan) （Details） Core operating Profit 11.7 gains on sale of Proceeds from sale of non-current assets 1.6 Yebisu Square +2.0 Impairment losses (1.3) Early Retirement Incentive Other 0.2 Program & Others Operating Profit 12.

  28. Slide 28: Special factors for 2020 plan

    Special factors for 2020 plan Yasuma’s revenue contributes year-round ＜Special factors in business results (YoY)＞ Impact on Impact on Business segment Details revenue operating profit Alcoholic Wild Rose Brewery LTD. -: negligible impact - - Beverages Consolidated from 2Q of 2019 *Contribution throu

  29. Slide 29: 2019 Business Results

    2019 Business Results Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved. 29/59

  30. Slide 30: Results Highlight

    Results Highlight YoY changes （billions of yen） 2018 2019 (amount/%) Revenue（Including liquor tax） 493.9 491.9 (2.0) (0.4%) Revenue（Excluding liquor tax） 370.8 371.1 0.3 0.1% Overseas revenue to total （Excluding liquor tax） 16.9% 16.3% (0.6%) - EBITDA 39.8 36.0 (3.8) (9.5%) Core operating profit 15.

  31. Slide 31: Results Highlights

    Results Highlights Profit down due to loss on the sale of Country Pure Foods. (Billion yen) Operating Profit attributable to Revenue YoY change profit YoY change owners of parent YoY change 493.9 491.9 12.2 11.6 8.5 44 2018 2019 2018 2019 2018 2019  Revenue of Japanese alcoholic  Operating profit

  32. Slide 32: Results Highlights

    Results Highlights Balance of net Cash basis (Billion yen) Equity debt investment 2018 2018 2019 218.4 212.1 2019 164.7 174.5 2019 plan 41.8 YoY change YoY change D/E ratio (net) times (0.1) times Dividend per share yen ±0 yen Transformation of the Group Group Topics management platform <October - D

  33. Slide 33: Revenue by Segment

    Revenue by Segment YoY changes YoY changes （billions of yen） 2018 2019 (amount) (%) Revenue by Segment 493.9 (0.4%) Alcoholic Beverages 330.0 (1.7%) Japan & Asia 252.1 (3.2) (1.3%) North America 50.3 (2.1) (4.1%) Restaurants 27.6 (0.3) (1.1%) Food & Soft Drinks 133.4 2.6% Real Estate 24.5 0.8% Other

  34. Slide 34: Main Factors Contributing to Changes in Revenue

    Main Factors Contributing to Changes in Revenue Though consolidation of Yasuma contributed, revenue declined due to a decline in = Increase sales volume of new genre products and the impact of the stronger yen. = Decrease Alcoholic Beverages Food & Soft Drinks Real Estate (Billion yen) 2018 RTD＋3.4

  35. Slide 35: Operating Profit by Segment

    Operating Profit by Segment YoY changes YoY changes （billions of yen） 2018 2019 (amount) (%) Operating Profit by Segment 11.6 5.3% Alcoholic Beverages 3.9 104.3% Japan & Asia 6.9 0.9 13.2% North America (2.8) 2.9 - Restaurants (0.2) 0.2 - Food & Soft Drinks 1.9 - Real Estate 12.0 5.5% Other 0.2 - Ge

  36. Slide 36: Main Factors Contributing to Changes in Operating Profit

    Main Factors Contributing to Changes in Operating Profit Operating profit increased on back of impairment loss recorded in 2018 for Anchor = Increase and gains on sale of real estate in 2019. = Decrease Alcoholic Beverages (2018) Food & Soft Drinks Real Estate Impairment for Anchor +4.4 (2018) Unrea

  37. Slide 37: Alcoholic Beverages

    Alcoholic Beverages Sapporo Premium in North America and domestic beer performed strongly, weak elsewhere <Quarterly operating profit (vs. previous year)> (Billion yen) 60 (0.3) bn yen Positive Black Label and Yebisu brand canned products up YoY 6 40 +2.2 bn yen RTD revenue continued to grow 4 ＋1.

  38. Slide 38: Food & Soft Drinks

    Food & Soft Drinks Lemon-based products were strong in Japan, but food and soft drinks both struggled due to unfavorable weather (Billion yen)  Lemon-based products remain strong 3 30 Positive (1.8) bn yen  New product “LEMON MADE” performing strongly, helping to drive forward other lemon-based dr

  39. Slide 39: Real Estate, Corporate, Other

    Real Estate Corporate, Other Existing properties performing solidly Cost rose due to expenditure for management platform development Property sale (Billion（億円） yen) Property sale +1.1 bn yen （億円） (Billion yen) 4 40 +1.9 bn yen (0.9) bn yen (0.1) bn yen (0.2) bn yen ＋1.9 bn yen (1.3) (1.6) (1.5) (1.7

  40. Slide 40: Special Factors

    Special Factors Yasuma’s consolidation contributed; impact of foreign exchange on operating profit was negligible <Special factors in business results (YoY)> Impact on Impact on -: negligible Business segment Details operating revenue impact profit Alcoholic WILD ROSE BREWERY LTD. - - Beverages Cons

  41. Slide 41: Changes in Balance sheets: Assets

    Changes in Balance sheets Total assets decreased ¥1.0 billion from year end Total assets Total assets Cash and cash equivalents (billions of yen) Trade receivables 10.0 15.2 Current assets 93.3 92.5 YoY change Inventories 37.1 36.5 + 2.2 13.1 11.5 Other current assets 164.7 155.9 Fixed assets Non-cu

  42. Slide 42: Changes in Balance sheets: Liabilities and Equity

    Changes in Balance sheets Total liabilities declined ¥10.8 billion from year end, total equity increased ¥9.8 billion (billions of yen) Trade payables Total liabilities and Total liabilities and equity equity Short-term financial liabilities 35.3 34.5 Current liabilities Other current liabilities 73

  43. Slide 43: Financial Status

    Financial Status ① <Capital expenditure> Investment on a cash basis was ¥41.8 billion Consolidated total of approx. ¥ billion <Consolidated cash flow (CF) statement> (Property, plant and equipment, intangible assets) <Major items> (Billion yen) 2018 2019 Change Change (%) ・“Alcoholic Beverages,” “Fo

  44. Slide 44: Appendix

    Appendix Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved. 44/59

  45. Slide 45: 2018 4Q Conversion Table of Revenue, Operating Profit by Segment

    Appendix: 2018 4Q ( Previous year’s result ) Conversion Table of Revenue, Operating Profit by Segment Former segments New segments *( ) denotes new segment (5 business domain (3 business domain Difference Remarks structure) structure) Revenue 493.9 - Japanese Alcoholic Beverage (Alcoholic Beverages)

  46. Slide 46: Major sales & sale volume

    Appendix：Major sales & sale volume Alcoholic Beverages (Japan) (10,000 cases) Soft Drinks (POKKA SAPPORO FOOD & BEVERAGE) (10,000 cases) Full-year Full-year Fiscal 2018 Fiscal 2019 YoY estimate for YoY Fiscal 2018 Fiscal 2019 YoY estimate for YoY fiscal 2020 fiscal 2020 Sapporo Draft Beer Black Labe

  47. Slide 47: Alcoholic Beverages (Japan)

    Appendix：Alcoholic Beverages (Japan) ＜Y-o-y change in sales volume of 3 core brands＞ （Cumulative sales） 【Beer】（Sales volume） %  Jan- Dec up ％ y-o-y 110  Black Label brand total : down ％ y-o-y 100 （Sales of the canned version：up ％ y-o-y） 90  Yebisu brand total : down ％ y-o-y 80 （Sales of the canne

  48. Slide 48: Alcoholic Beverages (Japan)

    Appendix：Alcoholic Beverages (Japan) (10,000 cases) ＜3 Core brand Jan- Dec Sales volume change＞ ＜Beer lineup (Jan- Dec break down)＞ 1,800 1,600 17% 1,400 1,200 1,000 28% 800 55% 600 400 200 Black label Yebisu Other 0 2013 2014 2015 2016 2017 2018 2019 Black label brand total Yebisu brand total Mugi

  49. Slide 49: Alcoholic Beverages (Japan)

    Appendix：Alcoholic Beverages (Japan) ※Incl. liquor tax ＜Jan- Dec sales revenue＞ ＜Jan- Dec sales breakdown by category＞ 250.0 (Billions of yen) 59.5 8% 200.0 75.3 79.3 70.6 65.0 50.1 45.5 5% Beer Happoshu & New genre 150.0 8% Wine & Spirits Japanese liquor 100.0 159.7 167.2 171.0 165.8 167.4 RTD & No

  50. Slide 50: Alcoholic Beverages (Japan)

    Appendix：Alcoholic Beverages (Japan) ＜Jan- Dec sales revenue＞ (Billions of yen) 16 16 14 14 12 12 10 10 8.3 8.2 8.5 8.5 7.7 8.2 8.4 8 8 15.2 6 6 11.8 4 4 7.0 5.1 5.6 5.3 5.0 5.1 4.7 2 4.5 4.3 5.1 2 4.3 3.2 0 0 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 Japanese wine Import

  51. Slide 51: Major New Alcoholic Beverages (Japan) Product Launches

    Appendix：Major New Alcoholic Beverages (Japan) Product Launches in Oct, Nov, and Dec *incl. improved products (*1) Sapporo Draft Beer Yebisu Wa No Houjun Yebisu Mugi to Hop 雫 Black Label Sapporo Classic Sapporo Kronenbourg (Special Edition) Shizuku <Red> Mugi to Hop Hakone Ekiden can Sapporo Draft L

  52. Slide 52: Alcoholic Beverages (Overseas)

    Appendix：Alcoholic Beverages (Overseas) 【Overseas brand】 （Products of Sleeman and Anchor) ＜Overseas sales volume (Jan-Dec)＞ （Sales volume）  Jan- Dec down ％ y-o-y （10,000 cases）  1,600 Acquired Acquired Anchor WILD ROSE 【Sapporo brand】 1,400  Jan- Dec down ％ y-o-y 1,200 【Vietnam】 1,000  Jan- Dec

  53. Slide 53: Alcoholic Beverages (Overseas)

    Appendix：Alcoholic Beverages (Overseas) ＜Sleeman：Sales revenue in local currency (Jan- Dec）＞ ＜Sapporo U.S.A.& Anchor：Sales revenue in local currency (Jan- Dec）＞ *before elimination of inter- company transactions *before elimination of inter- company transactions 600 100 J GAAP IFRS （Excluded liquor

  54. Slide 54: Alcoholic Beverages (Restaurants)

    Appendix：Alcoholic Beverages (Restaurants) ＜Sales revenue and number of Sapporo Lion Outlets> ＜Sapporo Lion outlets＞ As of Dec 31, 2019 (Billions of yen) ※before rebate deduction 25 200 190 185 20 180 10 11 170 175 170 169 15 161 160 25.8 Tokyo Metroporitan 25.1 24.8 24.8 25.1 23.9 23.9 14 10 140 Ka

  55. Slide 55: Food & Soft Drinks

    Appendix：Food & Soft Drinks ＜ Japanese soft drinks POKKA SAPPORO Food & Beverage ＞ Sales composition by sales channel (Jan- Dec) 【Lemon based-drinks】 【Lemon-based food products】  Jan-Dec up ％ y-o-y  Jan-Dec up ％ y-o-y 43% （Sales volume) （Sales volume) 44.06 million Vending machines Retailer cases

  56. Slide 56: Food & Soft Drinks

    Appendix：Food & Soft Drinks ＜ Food & Soft Drinks segment 【Pokka Create Co., Ltd.】 Revenue break down by geographic area ＞  Jan- Dec Sales revenue billion 85% up ％ y-o-y ＜ Number of outlets as of Dec 31, 2019> 15% 113 East Japan 58 208 outlets Central Japan West Japan Japan Overseas Increased 6 outl

  57. Slide 57: Major New Food & Soft Drinks (Japan) Product Launches

    Appendix: Major New Food & Soft Drinks (Japan) Product Launches in Oct, Nov, and Dec Gabunomi Gabunomi Shigekikkusu lemon sparkring Aofuyu coke https://www.pokkasapporo-fb.jp/company/news/release/20191004_01.html https://www.pokkasapporo-fb.jp/company/news/release/191114_01.html Jikkuri kotokoto cup

  58. Slide 58: Real Estate

    Appendix：Real Estate ＜ Information about ＜ Major rental properties & occupancy rates：（Averages for 2019 4Q )>＞ Investment property ＞ (billions of yen) Occupancy 400.0 Site area Floor area rate No. of floors （㎡） （㎡） （%） 300.0 40 floors above Yebisu Garden Place（1） 56,943 298,007 99 ground, 5 below 12

  59. Slide 59: Closing statement

    As an intrinsic part of people's lives, Sapporo will contribute to the evolution of creative, enriching and rewarding lifestyles. Copyright, 2020 SAPPORO HOLDINGS LTD. All rights reserved. 59/59

Sapporo Holdings — FY2019 Earnings Presentation on 6ix