Sapporo Holdings Limited · TSE:2501
Sapporo — H1 2019 Earnings Presentation
44 slides from Sapporo's earnings presentation, Aug 6, 2019
Slide 1: Sapporo Group Business Results Presentation for the Six Months Ended June 30, 2019
Sapporo Group Business Results Presentation for the Six Months Ended June 30, 2019 August 6, 2019 URL https://www.sapporoholdings.jp./en/ Copyright, 2019 SAPPORO HOLDINGS LTD. All rights reserved. 1/44
Slide 2: Agenda
1. Progress in Structural Reform and Growth Fields・・・p3-6 2. Second-Quarter 2019 Highlights・・・・・・ ・ ・・・・・・ p7-21 3. Reference Materials・・・・・・・・・・・・・・・・・・・・・・p22-43 Copyright, 2019 SAPPORO HOLDINGS LTD. All rights reserved. 2/44
Slide 3: Progress of Structural Reform
Progress of Structural Reform Steady progress has been made with structural reform of businesses facing issues We plan to disclose the details by the time of reporting full-year earnings results for 2019 *Republished SPEED 150 First Medium-Term Management Plan (2017-2019) Transformation with unprece
Slide 4: Strengthening of Beer Business and Approach to Low Price Category
Strengthening of Beer Business and Approach to Low Price Category Steady progress made with strengthening of beer business <YoY change in beer category sales volume> （％） (Monthly cumulative) 110 ＋ 5 % 100 3 ＋ % 90 80 Jan Feb Mar April May June Total demand for beer Sales volume of Sales volume of Ye
Slide 5: Promote Global Business Expansion
Promote Global Business Expansion Rising logistics costs have been weighing on profits in North America We will build optimal SCM frameworks that enable production near crucial areas and put together a strong brand portfolio to aim for medium- to long-term growth. ＝Crucial areas Imports from Sleeman
Slide 6: Accelerate Growth in the Food Field
Accelerate Growth in the Food Field Procurement of ingredients is one of Yasuma Co., Ltd.’s strengths We will pursue strengthening of the value chain and build a unique presence in specific categories A - Create synergies based on R&D Ferment Granulate Grind Extract Sterilize Condense - Ingredient p
Slide 7: Business Results
Business Results Copyright, 2019 SAPPORO HOLDINGS LTD. All rights reserved. 7/44
Slide 8: Second-Quarter 2019 Highlights
Second-Quarter 2019 Highlights The alcoholic beverages business (Japan) led growth, and revenue increased, but North American beverages and food & soft drinks facing issues Give priority to brand reinforcement and structural reform rather than short-term business performance (billions of yen) YoY ch
Slide 9: Second-Quarter 2019 Highlights
Second-Quarter 2019 Highlights (billions of yen) Balance of net debt Equity Cash basis investment 2018-end 2018-end 2019 plan 2019 2Q 2019 2Q YoY change D/E ratio (net) times ±0.0 times Transformation of the Group management platform Group topics Sapporo Holdings announces its support of the recom
Slide 10: Revenue by Segment
Revenue by Segment 2019 (billions of yen) 2018 2019 YoY changes YoY changes 2Q 2Q (amount) (%) Revenue by Segment 241.7 0.5% Alcoholic Beverages 151.0 (0.8)% Japan & Asia 114.0 (0.4) (0.4)% North America 23.8 (0.5) (2.0)% Restaurants 13.2 (0.3) (2.1)% Food & Soft Drinks 75.8 3.2% Japan & Asia 62.4 1
Slide 11: Main Factors Contributing to Changes in Revenue
Main Factors Contributing to Changes in Revenue In addition to growth of beer and RTD, consolidation of Yasuma and improvement in North = Increase American soft drinks more than offset decline in happoshu and new genre products = Decrease Alcoholic Beverages Food & Soft Drinks Real Estate (billions
Slide 12: Operating Profit by Segment
Operating Profit byOperating Segment Profit by Segment 2019 (billions of yen) 2018 2019 YoY changes YoY changes 2Q 2Q (amount) (%) Operating Profit by Segment (3.0) - Alcoholic Beverages (2.7) - Japan & Asia (2.2) 2.6 - North America 0.1 (0.7) - Restaurants (0.5) 0.0 - Food & Soft Drinks (1.7) - Jap
Slide 13: Main Factors Contributing to Changes in Operating Profit
Main Factors Contributing to Changes in Operating Profit Contribution from cost control and product mix improvement through strengthening of beer business Sale of investment real estate in 1Q, and improvement of operating profit to almost flat year-on-year level (billions of yen) 2018 Alcoholic Beve
Slide 14: Alcoholic Beverages
Alcoholic Beverages Situation in 2Q Future initiatives, etc. Positive (1) The beer market continues to decline and there are gaps with the (1) Continued to strengthen beer business in Japan forecast, but the mainstay brands have trended steadily. Sales of both Black Label and Yebisu in cans increase
Slide 15: Food & Soft Drinks
Food & Soft Drinks Situation in 2Q Future initiatives, etc. Positive (1) Propose commercial-use products and broadening of applications to expand the market (1) Lemon-based food products continue to be strong (up 12%) (2) Reduce future ingredient procurement risk. (2) Consolidation of Yasuma contrib
Slide 16: Real Estate
Real Estate Situation in 2Q Future initiatives, etc. Positive (1) Aim for stable growth through regular maintenance and repair and (1) Mainstay properties maintained high occupancy rates measures to increase value. (2) Purchased Meguro Villa Garden, Ebisu Minami Building, (2) Continue to promote urb
Slide 17: Special factors in the business results
Special factors in the business results Impact of exchange rates on operating profit is minimal <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 o
Slide 18: Changes in Balance Sheets
Changes in Balance Sheets Total assets decreased ¥ 0.4 billion from year end Total assets (billions of yen) Cash and cash equivalents Total assets Trade receivables 10.0 8.7 →Seasonal factors, etc. 93.3 82.5 Current assets YoY change -7.4 Inventories 37.1 41.8 13.1 13.2 Other current assets 164.7 16
Slide 19: Changes in Balance Sheets
Changes in Balance Sheets Total liabilities declined ¥1.4 billion from year end, total equity increased ¥1.0 billion (billions of yen) Trade payables Total liabilities and equity Total liabilities and equity Short-term financial liabilities 35.3 36.0 Other current liabilities 73.9 83.7 Current liabi
Slide 20: Financial Status
Financial Status Investment on a cash basis was ¥26.5 billion ① <Capital expenditure> <Consolidated cash flow (CF) statement> about ¥ billion in consolidated total (property, plant and equipment, intangible assets) Change 2018 2Q 2019 2Q Change <Major items> (%) ・“Alcoholic Beverages,” “Food,” and “
Slide 21: Transformation of the Group Management Platform
Transformation of the Group Management Platform R&D Lightweight beer can caps won prize at 43rd Kinoshita Awards -CO2 emission reduction of as much as 1,200 tons a year by reducing the amount of aluminum used- On June 18, Sapporo Breweries Ltd. received a prize at the 43rd Kinoshita Awards in the “K
Slide 22: Appendix
Appendix Copyright, 2019 SAPPORO HOLDINGS LTD. All rights reserved. 22/44
Slide 23: Conversion Table of Revenue, Operating Profit by Segment
Appendix: 2018 2Q ( 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 (billions of yen) 241.7 - Japanese Alcoholic Beverage (Al
Slide 24: Appendix: Major sales & sale volume
Appendix：Major sales & sale volume Copyright, 2019 SAPPORO HOLDINGS LTD. All rights reserved. 24/44
Slide 25: Alcoholic Beverages (Japan)
Appendix：Alcoholic Beverages (Japan) ＜Y-o-y change in sales volume of 3 core brands＞ （Cumulative sales） 【Beer】（Sales volume） % Jan- Jun up ％ y-o-y 110 Black Label brand total : Unchanged y-o-y （Sales of the canned version：up ％ y-o-y） 100 90 Yebisu brand total : down ％ y-o-y 80 70 【Happoshu and
Slide 26: Alcoholic Beverages (Japan)
Appendix：Alcoholic Beverages (Japan) (10,000 cases) ＜3 Core brand Jan- Jun Sales volume change＞ ＜Beer lineup (Jan- Jun break down)＞ 900 800 16% 700 600 26% 500 400 300 58% 200 100 Black label Yebisu Other 0 2013 2014 2015 2016 2017 2018 2019 Black label brand total Yebisu brand total Mugi to Hop Cop
Slide 27: Alcoholic Beverages (Japan)
Appendix：Alcoholic Beverages (Japan) ＜Jan- Jun sales revenue＞ ＜Jan- Jun sales breakdown by category＞ 120.0 (Billions of yen) ※Incl. liquor tax 100.0 9% 5% 28.9 33.4 38.4 31.8 33.3 25.2 21.0 80.0 Beer 8% Happoshu & New genre 60.0 Wine & Spirits 40.0 Japanese liquor 72.1 76.3 71.5 74.4 69.2 68.0 67.8
Slide 28: Alcoholic Beverages (Japan)
Appendix：Alcoholic Beverages (Japan) ＜Jan- Jun sales revenue＞ (Billions of yen) 7 9 8 6 7 5 6 3.5 3.4 3.6 3.7 5 4 3.3 3.5 3.6 4 7.9 3 3 2 2 3.9 2.3 2.7 2.5 2.4 2.4 2.3 2.3 2.4 3.1 1 2.1 1 1.2 2 0 0 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 Japanese wine Imported wine ＲＴＤ
Slide 29: Major New Alcoholic Beverages (Japan) Product Launches
Appendix：Major New Alcoholic Beverages (Japan) Product Launches in Apr, May, and Jun *incl. improved products (*1) Limited version of Limited version of Sapporo Draft One (*1) Sapporo Classic Mugi to Hop Sapporo Draft Beer Black Label Limited version of Yebisu Limited version of Limited version of H
Slide 30: Sapporo Draft Beer Black Label THE BAR opens first year-round antenna shop
Appendix：Alcoholic Beverages (Japan) The Sapporo Draft Beer Black Label THE BAR opens first year-round antenna shop Offering the “perfect draft beer” to customers at “the moment beer is most delicious” Sapporo Breweries Ltd. opened the Sapporo Draft Beer Black Label THE BAR in basement level 1 of GI
Slide 31: Nation-wide joint collection of beer pallets by four beer companies
Appendix：Alcoholic Beverages (Japan) Nation-wide implementation of joint collection of beer pallets by four beer companies Sapporo Breweries Ltd. (President: Hideya Takashima), Suntory Beer Ltd. (President: Kenji Yamada), Asahi Breweries, Ltd. (President: Kenichi Shiozawa) and Kirin Brewery Company,
Slide 32: Launch of Hottokenaido co-creation initiative
Appendix：Alcoholic Beverages (Japan) Launch of “Hottokenaido,” a co-creation initiative that supports new endeavors in Hokkaido Hottokenaido -First initiative of its kind in the world!? Support the project by having a drink!- Kampai ☆ Funding Support! Challenge! Sapporo Breweries, Ltd., under the sl
Slide 33: Alcoholic Beverages (Overseas)
Appendix：Alcoholic Beverages (Overseas) 【Overseas brand】 （Products of Sleeman and Anchor) ＜Overseas sales volume (Jan-Jun)＞ Jan- Jun down ％ （10,000 cases） 700 【Sapporo brand】 600 Jan- Jun up ％ 500 【Vietnam】 400 Jan- Jun up ％（including export） 662 645 300 598 593 604 606 615 ＜Y-o-y change in do
Slide 34: Alcoholic Beverages (Overseas)
Appendix：Alcoholic Beverages (Overseas) ＜Sleeman：Sales revenue in local currency (Jan- Jun）＞ ＜Sapporo U.S.A.& Anchor：Sales revenue in local currency (Jan- Jun）＞ *before elimination of inter- company transactions *before elimination of inter- company transactions 300 50 J GAAP IFRS （Excluded liquor （
Slide 35: Acquired Wild Rose Brewery, Canada
Appendix: Alcoholic Beverages (Overseas) Acquired Wild Rose Brewery, Canada (hereinafter referred to as “WR”) <Company profile> -Location: Calgary, Alberta, Canada -Established: 1996 -Annual sales: 2018: 20,928HL (about 165,000 cases of large bottles) -Production capacity: 33,300HL/year (about 261,0
Slide 36: Alcoholic Beverages (Restaurants)
Appendix：Alcoholic Beverages (Restaurants) ＜Sales revenue and number of Sapporo Lion Outlets> ＜Sapporo Lion outlets＞ As of June 30, 2019 (Billions of yen) ※before rebate deduction 220 14 12 200 10 189 183 180 7 10 174 173 174 170 8 159 160 14 Tokyo Metroporitan 6 12.1 11.8 11.8 11.5 11.9 11.3 11.3 1
Slide 37: Food & Soft Drinks
Appendix：Food & Soft Drinks ＜ Japanese soft drinks POKKA SAPPORO Food & Beverage Sales composition by sales channel (Jan- Jun) 【Lemon based-drinks】 【Lemon-based food products】 Jan-Jun up ％ y-o-y Jan-Jun up ％ y-o-y （Sales volume) 45% （Sales volume) 19.54 million Vending machines Relailer 【Unsweet
Slide 38: Food & Soft Drinks
Appendix：Food & Soft Drinks ＜ ＜ Food & Soft Drinks segment 【Pokka Create Co., Ltd.】 Revenue break down by geographic area ＞ Jan- Jun Sales revenue billion 83% up ％ y-o-y ＜ Number of outlets as of Jun 30, 2019> 17% 113 East Japan 57 206 outlets Central Japan West Japan Japan Overseas Decreased 4 ou
Slide 39: Major New Food & Soft Drinks (Japan) Product Launches
Appendix: Major New Food & Soft Drinks (Japan) Product Launches in Apr, May, and Jun Unsweetened tea (Hokkaido Yasashii Umacha) SOYBIO Soymilk yogurt Almond Breeze series Jikkuri kotokoto Soup Lemonade Stand Promotion Association: Child cancer donation LEMON MADE Purune jelly Copyright, 2019 SAPPORO
Slide 40: Start of lemon cultivation in Osakikamijima Town (Hiroshima)
Appendix：Food & Soft Drinks Start of lemon cultivation in Osakikamijima Town (Hiroshima) POKKA SAPPORO Food & Beverages Ltd. started cultivation of lemon in Osakikamijima Town, Toyoda-gun, Hiroshima Prefecture, in April 2019 with the aim of revitalizing lemon production in Japan. Ever since starting
Slide 41: Acquired Yasuma Co., Ltd.
Appendix：Food & Soft Drinks Acquired Yasuma Co., Ltd., a company with strengths in spices and seasonings <Company profile> -Established: 1947 -Capitalization: 90 million yen -Employees: Approx. 200 -Locations: Tokyo Head Office, Osaka Office, Yokohama Plant, Shizuoka Plant, Shizuoka R&D Center <Back
Slide 42: Real Estate
Appendix：Real Estate ＜ Information about ＜ Major rental properties & occupancy rates：（Averages for 2019 2Q )>＞ Investment property ＞ (billions of yen) Occupancy 500.0 Site area Floor area rate No. of floors 400.0 （㎡） （㎡） （%） 300.0 40 floors above 200.0 397.6 386.0 Yebisu Garden Place（1） 56,943 298,0
Slide 43: New composite workplace to open in Yebisu Garden Place
Appendix: Real Estate A new composite workplace offering new lifestyles to open in Yebisu Garden Place -Scheduled to open in fall 2019- Yebisu Garden Place (location: Ebisu 4-chome, Shibuya-ku, Tokyo), operated by Sapporo Real Estate Co., Ltd. (Head Office: Shibuya-ku, Tokyo; President: Hiroshi Toki
Slide 44: As an intrinsic part of people's lives, Sapporo will contribute to evolution of lifestyles
As an intrinsic part of people's lives, Sapporo will contribute to the evolution of creative, enriching and rewarding lifestyles. Copyright, 2019 SAPPORO HOLDINGS LTD. All rights reserved. 44/44