Sapporo Holdings Limited · TSE:2501

Sapporo — Q3 2018 Earnings Presentation

41 slides from Sapporo's earnings presentation, Nov 2, 2018

1. Slide 1: Sapporo Group Business Results Presentation for the Nine Months Ended September 30, 2018

   Sapporo Group Business Results Presentation for the Nine Months Ended September 30, 2018 November 2, 2018 URL http://www.sapporoholdings.jp/english Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 1/41

2. Slide 2: Third-Quarter 2018 Key Points

   <Third-Quarter 2018 Key Points> Performance improved in each business despite impact of unseasonal weather and natural disasters <Operating profit levels for each quarter (YoY comparison)> Japanese Alcoholic Beverages International Food & Soft Drinks 40 60 8.0 5.3 20 2.0 4.0 4.2 4.1 0.6 0.6 2.6 6.0

3. Slide 3: Restaurants, Real Estate, Corporate and Other Key Points

   Restaurants Real Estate Corporate, Other 2.0 20 404.0 3.3 3.6 0 0 2.8 0.5 0.3 00 202.0 ▲ 20 ‐2.0 ‐1.4 ‐1.6 ‐1.5 ‐0.6 ▲‐2.0 20 0 0 ▲ 40 ‐4.0 Jan‐Mar 1‐3⽉ Apr‐Jun 4‐6⽉ Jul‐Sep 7‐9⽉ Oct‐Dec 10‐12⽉ 1‐3⽉ Jan‐Mar 4‐6⽉ Apr‐Jun 7‐9⽉ Jul‐Sep 10‐12⽉ Oct‐Dec Jan‐Mar 1‐3⽉ Apr‐Jun 4‐6⽉ Jul‐Sep 7‐9⽉ Oct‐Dec 10‐12

4. Slide 4: Third-Quarter 2018 Highlight

   2018 Third-Quarter 2018 Highlight 3Q While both sales and profits fell due to the poor performance in the first half, operating profit for the Jul-Sep period increased about ¥1.3 billion. YoY (billions of yen) change Profit attributable to Revenue Operating Profit YoY owners of parent change 2017 3Q

5. Slide 5: Third-Quarter 2018 Highlights

   2018 Third-Quarter 2018 Highlights 3Q (billions of yen) Balance of net debt Equity Cash basis investment 2017 3Q（IFRS） 2017 3Q（IFRS） 2018 plan 2018 3Q（IFRS） 2018 3Q（IFRS） D/E ratio times *See p.16, 17 for details of BS *See p.15 for details Transformation of the Group Group Topics management platfor

6. Slide 6: Revenue by Segment

   2018 Revenue by Segment 3Q (billions of yen) Change <difference YoY ① 2017 3Q ② 2017 3Q due to accounting ③ 2018 3Q change YoY change (rate) (Japanese GAAP) (IFRS) standards> （IFRS） （③-②） (②-①) (③-②) Consolidated revenue 400.8 (10.1) -2.5％ Japanese Alcoholic Beverages* 201.4 (13.8) -4.2% (Rebate sub

7. Slide 7: Main Factors Contributing to Changes in Revenue

   2018 Main Factors Contributing to Changes in Revenue 3Q : The main factors are revenue declines in the high price range = Increase beer and new genre categories = Decrease (billions of yen) Japanese Alcoholic Food & Soft Real Beverages International Restaurants Drinks Estate 2017 3Q Diversified prod

8. Slide 8: Operating Profit by Segment

   2018 Operating Profit by Segment 3Q ① 2017 3Q ② 2017 3Q Change <difference due ③ 2018 3Q YoY change (billions of yen) (Japanese GAAP) (IFRS) to accounting standards> (②-①) （IFRS） (③-②) Consolidated operating profit 10.7 (1.0) (Retirement benefit expenses -1.0, etc.) Japanese Alcoholic Beverages* 6.2

9. Slide 9: Main Factors Contributing to Changes in Operating Profit

   Main Factors Contributing to Changes in Operating Profit 2018 3Q : Significant profit increase in Vietnam, Real Estate continues to be strong = Increase While RTD led Japanese Alcoholic Beverages, profit declined due to lower sales of beer and = Decrease beer-type beverages Japanese Food & Soft Real

10. Slide 10: Japanese Alcoholic Beverages

    Japanese Alcoholic Revenue YoY IFRS Operating YoY 2018 Change Beverages profit Change *YoY change is on an IFRS basis 3Q <YoY changes in sales volume of Black Label brand products> Positive 115 *Cumulative  Black Label brand cans were up % year on year 110 exceeding total demand growth rate for bee

11. Slide 11: International

    IFRS 2018 International Revenue YoY change Operating YoY change profit *YoY change is on an IFRS basis 3Q <Changes in overseas beer sales volume (cumulative from Jan to Sep every year> Positive  Sales at Sleeman continued to increase 500 (unit: 10,000 cases, large bottle count) 400 300  Sapporo br

12. Slide 12: Food & Soft Drinks

    IFRS 2018 Food & Soft Drinks Revenue YoY change Operating YoY change profit *YoY change is on an IFRS basis 3Q  Sales volume of lemon-based products were <YoY change in sales volume of lemon-based products> Positive *Cumulative up % year on year 120  Soy and chilled products, which we are currentl

13. Slide 13: Restaurants and Real Estate

    Revenue YoY Revenue YoY Restaurants IFRS change Real Estate IFRS change Operating YoY Operating YoY profit change profit change Positive Positive  Strong performance by  All mainstay properties maintained Yebisu Bar format stable occupancy rates  Carried out strategic reallocation of  Transferre

14. Slide 14: Special Factors in the Business Results

    2018 Special Factors in the Business Results 3Q  Impact of exchange rates on operating profit is negligible <Special factors in business results (YoY)> Impact on Business segment Details revenue ANCHOR BREWING COMPANY, LLC Approx. International Consolidation began in October 2017 +¥2.1 billion Food

15. Slide 15: Financial Status

    2018 Financial Status 3Q  Cash basis investment totaled ¥24.0 billion ①<Capital expenditure> consolidated total of approx. ¥ billion ＜Changes in cash basis investment＞ (tangibles, intangibles) 45 <Major items> Cash flow from investment - “Alcoholic Beverages,” “Food,” “Soft Drinks” –related: 40 act

16. Slide 16: Changes in Balance Sheets (Assets)

    2018 Changes in Balance Sheets 3Q : Total assets declined ¥19.9 billion compared with the end of the previous year Total assets Total assets Cash and cash equivalents (billions of yen) 12.5 10.8 Trade receivables →Seasonal factors, etc. 98.3 80.8 Current assets Inventories 37.9 39.9 16.0 14.7 Other

17. Slide 17: Changes in Balance Sheets (Liabilities and Equity)

    2018 Changes in Balance Sheets 3Q ：Total liabilities down by ¥15.1 billion, total equity down by ¥4.8 billion compared with the end of the previous year Trade payables Total liabilities and equity Total liabilities and equity (billions of yen) Short-term financial liabilities 36.5 36.3 Other current

18. Slide 18: Transformation of the Group management platform: R&D

    2018 Transformation of the Group management platform 3Q R&D First in the world! Sapporo measures the color of beer foam - ”The foam of fresh beer is whiter and more beautiful,” “crystal malt enhances the color of foam” - Sapporo Breweries Ltd. developed a method to measure the color of beer foam for

19. Slide 19: Transformation of the Group management platform: Personnel

    2018 Transformation of the Group management platform 3Q Personnel, human resources Won Gold Medal at the 1st gan-ally-bu AWARDs 2018 -Strengthening the company with dialogue and systems that allow cancer patients to work more comfortably- Sapporo Breweries Ltd. won a gold medal at the 1st gan-ally-b

20. Slide 20: Appendix

    Appendix Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 20/41

21. Slide 21: Appendix: Major sales & sales volume

    Major sales & sales volume Appendix - Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 21/41

22. Slide 22: Japanese Alcoholic Beverages: Sales Volume

    【Beer】（sales volume） ＜Y-o-y change in sales volume of % 3 core brands> Jan-Sep down ％ y-o-y （total demand down 6％）115  Black Label Brand total down ％ y-o-y 105 （Sales of the canned version：up ％ y-o-y） 95  Yebisu Brand total down ％ y-o-y 85 75 【Happoshu and new genre】 （sales volume） Jan Feb Mar Apr

23. Slide 23: Core Brand Sales Volume

    (10,000 cases) ＜3 core brand Jan- Sep Sales volume change＞ 1,400 1,200 ＜Beer lineup (Jan – Sep breakdown＞ 1,000 14% Appendix Japanese Alcoholic 800 Beverages 600 58% 28% 400 200 Black label Yebisu Other 0 2012 2013 2014 2015 2016 2017 2018 Black label brand total Yebisu brand total Mugi to Hop brand

24. Slide 24: Japanese Alcoholic Beverages Net Sales

    ＜Jan- Sep Net Sales＞ (billions of yen) Billions of yen 10 ※incl. liquor tax 200 180 5.3 5.1 5.4 5.4 5.2 5 4.5 4.9 160 140 56.0 54.8 60.0 52.5 48.8 44.3 37.8 3.3 3.4 3.9 3.7 3.5 3.5 3.3 120 0 100 2012 2013 2014 2015 2016 2017 2018 80 Japanese wine Imported wine 8 60 110.7 112.8 112.0 111.7 117.8 121.

25. Slide 25: Major New Products (Beer)

    ＜Jul- Sep Major new products＞ *incl. improved products (※I) Sapporo LAGER BEER Hokkaido draft beer Kuradashi draft beer Kohaku YEBISU Black label＜Black＞ Baisen draft beer Appendix Japanese Alcoholic Beverages Mugi to Hop Furano no kaori Tohoku no kaori Innovative Brewer Mugi to Hop （Special edition)

26. Slide 26: Major New Products (RTD)

    ＜Jul- Sep Major new products＞ *incl. improved products (※I) Left：Citron Sour（※I） Otoko Ume sour (Plum RTD) Sapporo Chuhi 99.99 Right：Napoin Sour Otoko Ume sour (Plum RTD) Halloween special design （Four nine RTD） Left: Otoko Ume sour（※I） Midle: Super Otoko Ume sour（※I） Right:Dry Otoko Ume sour Append

27. Slide 27: Major New Products (Wine and Spirits)

    ＜Jul- Sep Major new products＞ *incl. improved products (※I) Appendix Bio Mania＜organic＞ Japanese wine Left: Chile Cabernet Sauvignon La cuvee MYTHIQUE Right: Chile Chardonnay Grande Polaire- Azuminoikeda (Japanese wine) Halloween design Dewarʼs White label 200ｍl Penfolds g3 Penfolds Grange Yellow ta

28. Slide 28: Japan Wine Competition 2018 Awards

    At Japan Wine Competition 2018, Grande Polaire Yamanashi Koshu Barrel Fermentation 2017 won first-ever three consecutive years of Gold and top honor in its category At the Japan Wine Competition 2018 held in July in Yamanashi Prefecture, Grande Polaire Yamanashi Koshu Barrel Fermentation 2017 won th

29. Slide 29: International: Overseas Brands and U.S. Soft Drinks

    【U.S. soft drinks business】 【Overseas brand】 (Products of Sleeman and Anchor)  Jan- Sep down ％ y-o-y ＊sales revenue after elimination  Jan-Sep up ％ y-o-y *sales volume of inter- company transactions ＜Ｕ.S. soft drinks business Net Sales in Local Currency 【Sapporo brand】 (Jan-Sep)＞ (※)SSC and CPF in

30. Slide 30: International: Sleeman, Sapporo U.S.A. and Sapporo Brand

    ＜SLEEMAN：Net Sales in Local Currency (Jan-Sep) Sapporo brand sales volume *before elimination of inter- company transactions breakdown by geographic area 450 J GAAP IFRS 9% 400 （Excluded liquor tax） （Included liquor tax） 7% 350 34% 300 250 26% 3.37 4.67 200 375 390 million cases million cases 150 67

31. Slide 31: Food & Soft Drinks: Sales Volume

    【Lemon-based drinks】 【Lemon-based food products】  Jan- Sep up ％ y-o-y *sales volume  Jan-Sep up ％ y-o-y *sales volume  【Unsweetened tea drinks】 【Soups】  Jan- Sep up ％ y-o-y *sales volume  Jan- Sep down ％ y-o-y *sales volume  【Coffee drinks】 【Soy milk, chilled products】  Jan- Sep down ％ y-o-y

32. Slide 32: Food & Soft Drinks Segment Revenue

    ＜Food & Soft Drinks segment Revenue> ＜Food & Soft Drinks segment (billions of Yen) (Jan- Sep) Revenue break down by geographic area＞ 120 ※April 2011 Consolidation of J GAAP IFRS 100 POKKA CORPORATION 80 85% 60 101.5 97.2 94.2 93.4 95.9 97.6 99.3 40 74.7 15% 20 Appendix 0 28.6 23.5 25.4 Food & Soft D

33. Slide 33: Pokka Create Outlets

    【Pokka Create CO., Ltd.】  Jan- Sep Revenue billion unchanged y-o-y ＜New & refurbish outlets ＞ <Number of outlets as of September 30, 2018 : 203> 53 203 Appendix East Japan 112 Central Japan Food & Soft Drinks outlets West Japan Increased 10 outlets compared with 38 2017 3Q （East +7, Central+1,West+

34. Slide 34: Major New Products: Drinks

    ＜Jul-Sep Major New products > Drink *incl. improved products (※I) Left:Chocolate drink Café de Crie Black coffee Rght:Milk shake 参考資料 JELEETS Crush Pudding (Pudding shake) Pear drink Appendix Unsweetened tea Lavender tea Tea latte (※I) Kireto lemon calcium drink Hibiscus tea Copyright, 2018 SAPPORO

35. Slide 35: Major New Products: Foods

    ＜Jul-Sep Major New products > Foods Risorante and other soups 参考資料 Appendix Jikkuri-kotokoto Soup series Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 35/41

36. Slide 36: Activities to Expand Pokka Lemon Brand Contacts

    [Activities to expand Pokka Lemon brand contacts] Lemon Sour Grand Prix 2018 in Kanto POKKA SAPPORO Food & Beverages Ltd. in collaboration with Gurunavi, Inc. held Lemon Sour Grand Prix 2018 in Kanto from June 18 to July 18, 2018. From the 121 original lemon sour menu items entered by the participat

37. Slide 37: Construction of New Soymilk Yogurt Production Line

    Construction of new soymilk yogurt production line POKKA SAPPORO Food & Beverages Ltd. has been creating new business and product fields while expanding its beverage brands leveraging strengths in the lemon and soup businesses. In October 2015, it purchased the business rights to soymilk drinks and

38. Slide 38: Restaurants: Sapporo Lion Outlets

    (billions of yen) Trends of net sales and number of ＜Sapporo Lion outlets ＞ Sapporo Lion Outlets *before rebate deduction As of Sep 30, 2017 25.0 220 20.0 195 194 200 7 10 186 188 180 14 Tokyo Metroporitan 15.0 177 173 168 170 160 4 Kanto(excl.Tokyo) 10.0 Hokkaido 17.9 19.3 19.6 19.0 18.9 18.7 19.0

39. Slide 39: Major Rental Properties & Occupancy Rates

    ＜Major rental properties & occupancy rates：（Averages for 201８ 3Q ) ＜Information about Real Estate for lease＞ Occupancy Site area Floor area (billions of yen) rate No. of floors 400 （㎡） （㎡） （%） 350 40 floors above Yebisu Garden Place（1） 56,943 298,007 100 300 ground, 5 below 12 floors above 250 Ebisu

40. Slide 40: Various Initiatives by the Sapporo Group

    Various Initiatives by the Sapporo Group  Selected as component for FTSE4Good Index Series and FTSE Blossom Japan Index, major indexes of ESG investment. http://www.sapporoholdings.jp/news_release/0000020447/index.html  Prior start of joint collection of beer pallets in 6 prefectures in Tohoku htt

41. Slide 41: As an intrinsic part of people's lives, Sapporo will contribute to lifestyles

    As an intrinsic part of people's lives, Sapporo will contribute to the evolution of creative, enriching and rewarding lifestyles. Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 41/41

Sapporo Holdings — Q3 2018 Earnings Presentation on 6ix