Sapporo Holdings Limited · TSE:2501

Sapporo — Q3 2017 Earnings Presentation

43 slides from Sapporo's earnings presentation, Nov 2, 2017

1. Slide 1: Sapporo Group Business Results Presentation for the Nine Months Ended September 30, 2017

   Sapporo Group Business Results Presentation for the Nine Months Ended September 30, 2017 November 2, 2017 URL http://www.sapporoholdings.jp/english Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 1/43

2. Slide 2: Contents

   Contents 1. 2017 3Q Results P3~21 Appendix：Collection of Data by business P22~42 Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 2/43

3. Slide 3: Third Quarter 2017 Highlight

   (billions of yen) 2016 3Q 2017 3Q YoY changes (amount, %) Net sales (incl. liquor tax) 392.2 400.8 8.5 2.2% Net sales (excl. liquor tax) 307.7 315.9 8.2 2.7% Overseas net sales to total (excl. liquor tax) 21.0% 21.3% 0.3% - Operating income 12.8 10.7 (2.1) (16.7)% Third Quarter Operating income befo

4. Slide 4: Third-Quarter 2017 Group Results Overview

   Third-Quarter 2017 Group Results Overview (billions of yen) Net sales YoY Change  Businesses on which we’ve been focusing such as beer, North American alcoholic beverages, lemon-based products and soups continue to produce results. Real estate is also maintaining steady earnings. Third Quarter  On

5. Slide 5: Net Sales by Segment

   (billions of yen) YoY changes 2016.3Q 2017.3Q (amount, %) Consolidated Net sales 392.2 2.2％ Japanese Alcoholic Beverages 200.0 (0.2)％ International 48.0 6.3% Net Sales by Segment Food & Soft Drinks 101.5 (0.1)% Restaurants 21.0 5.2% Real Estate 16.7 7.3% Other 4.7 77.9% Copyright, 2017 SAPPORO HOLDI

6. Slide 6: Main Factors Contributing to Changes in Net Sales

   ・Sales increase in beer in Japan, diversification and North American alcoholic beverages contributed ・Net increase in Ginza Place (from last September) and new consolidated business* Japanese Alcoholic Food & Soft Beverages International Drinks Restaurants Real Estate 2017 3Q (billions of yen) Main

7. Slide 7: Operating Income by Segment

   (billions of yen) 2016 3Q 2017 3Q YoY changes Consolidated operating income 12.8 Japanese Alcoholic Beverages 6.3 International 0.7 Food & Soft Drinks 0.6 Restaurants 0.5 Operating Income Real Estate 8.0 by Segment Other (0.1) General corporate and intercompany (3.4) eliminations Amortization of goo

8. Slide 8: Main Factors Contributing to Changes in Operating Income

   ・Decline in profit widens at happoshu, new genre and overseas soft drinks ・Operating income declined due to temporary M&A cost in addition to investment in management platform Japanese Alcoholic Food & Soft Real Beverages International Drinks Restaurants Estate (billions of yen) 2016 3Q Volume incre

9. Slide 9: Overview of Each Business

   Overview of Each Business Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 9/43

10. Slide 10: Japanese Alcoholic Beverages

    ・Beer and diversification have been strong amid declining total demand due to unseasonal weather and store price rise ・Promoting change in sales composition Japanese Alcoholic  Beer continued to be firm Beverages Positive (Black Label sales volume % y-o-y, Yebisu % y-o-y, beer total % y-o-y) (billi

11. Slide 11: International

    ・North American alcoholic beverages, CPF are strong; Work on issues regarding Vietnam, SSC International Positive  Despite stagnation in the market, both Sleeman and Sapporo USA (billions of yen) showed growth trend YoY (Sales volume at Sleeman y-o-y, Sapporo brand at Sapporo USA %) Sales change 

12. Slide 12: Food & Soft Drinks

    ・While sales of Japanese mainstay brands increased, overseas risks were exposed Food & Soft  Lemon-based products led the performance; tea drinks with rare Drinks Positive ingredients also maintained strong sales (billions of yen) (Lemon-based soft drinks sales volume % y-o-y, lemon-based food prod

13. Slide 13: Restaurants

    ・Sales expanded but personnel cost weighed on earnings  Existing store sales of parent Sapporo Lion were strong despite unseasonal weather in summer Restaurants Positive (Comparable-store sales y-o-y) (billions of yen)  Marushinkawamura contributed to sales. Aburiya format has been strong YoY (As

14. Slide 14: Real Estate

    ・Stable operation of mainstay properties; Progress in line with plan Real Estate Positive  Yebisu Garden Place (YGP) maintained stable occupancy rate (Jan-Sep office occupancy rate %) (billions of yen) YoY  GINZA PLACE contributed to earnings (started operation in Sales change September 2016) (Jan

15. Slide 15: Special Factors in the Business Results

    ・Difference in consolidated period of 2 group companies Impact of exchange rates negligible (- = negligible) <Special factors in business results> (YoY) Impact on Impact on Business segment Details operating sales income Marushinkawamura Inc.: consolidation began Approx. Restaurants in June 2016 - ¥

16. Slide 16: Changes in Extraordinary Gains and Losses

    Promoted asset efficiency (billions of yen) 2016 3Q 2017 3Q Change Factors contributing changes Operating income 12.8 10.7 (2.1) - Financial account balance (0.7) (0.5) 0.2 - Other non-operating income/expenses (0.6) 0.0 0.6 - Changes in Ordinary income 11.5 10.2 (1.3) - Extraordinary Gains on sales

17. Slide 17: Changes in Balance Sheets: Assets

    1.5 billion yen decline y-o-y in total assets <Comparison with the end of FY2016> Cash and cash Total assets equivalents (billions of yen) 10.5 13.0 10.5 Trade receivables 12.1 12.4 13.2 9.4 Current 96.8 81.7 64.3 74.8 68.4 78.9 assets →Impact of seasonal factors, etc. 71.2 37.9 42.8 41.2 41.1 40.6

18. Slide 18: Total liabilities down by 7.0 billion yen, total net assets down by 5.5 billion yen

    Total liabilities down by 7.0 billion yen, total net assets down by 5.5 billion yen <Comparison with the end of FY2016> Total liabilities, total net assets Accounts payable (billions of yen) Short-term bank liabilities 38.5 37.3 36.2 →Increase in short-term borrowings 34.6 37.8 38.8 35.8 73.4 88.8 D

19. Slide 19: Cash basis investment totaled 29.3 billion yen

    Cash basis investment totaled 29.3 billion yen (billions of yen) 45.0 <Trend in investment> ①<Capital expenditure> about ¥ billion in consolidated total 40.0 Cash flow from investment （tangibles, intangibles) activities: <Major items> 35.0 - “Alcoholic Beverages,” “Food” and “Soft Drinks” –related:

20. Slide 20: Promote initiatives for transformation of the Group management platform

    Promote initiatives for transformation of the Group management platform - Established Delicious Taste Technology Research Center in first quarter R&D - Pursue measures for creating values in food - Started health survey research related to lemon in Osakikamijima-cho in Hiroshima Prefecture - Started

21. Slide 21: Sapporo Group Health Creation Declaration

    Personnel, human resources Sapporo Group Health Creation Declaration -Strengthening initiatives to maintain and enhance the health of all group employees- [Sapporo Group Health Creation Declaration] 1. People are the bearers of a business You can take on challenges in a new field and cross the finis

22. Slide 22: Appendix

    Appendix Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 22/43

23. Slide 23: Major sales & sales volume

    Major sales & sales volume Appendix - Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 23/43

24. Slide 24: Japanese Alcoholic Beverages: Beer and Happoshu sales volume

    【Beer】 （sales volume） ＜Y-o-y change in sales volume of 3 core brands> Jan-Sep up ％ y-o-y （total demand down 2％） 115  Black Label Brand total up ％ y-o-y 110 （Sales of the canned version：up ％ y-o-y） 105  Yebisu Brand total up ％ y-o-y 100 95 【Happoshu+new genre】 （sales volume） Jan Feb Mar Apr May Jun

25. Slide 25: Core brand sales volume and beer lineup

    (10,000 cases) ＜3 core brand Jan- Sep Sales volume change＞ 1,400 1,200 ＜Beer lineup (Jan – Sep breakdown＞ 13% 1,000 Appendix Japanese Alcoholic 800 Beverages 600 56% 400 30% 200 Black label Yebisu Other 0 2011 2012 2013 2014 2015 2016 2017 Black label brand total Yebisu brand total Mugi to Hop brand

26. Slide 26: Japanese Alcoholic Beverages net sales

    10 (billions of yen) ＜Jan- Sep Net Sales＞ (billions of yen) ※incl. liquor tax 5.3 5.1 5.4 5.4 200.0 4.1 4.5 4.9 5 180.0 160.0 3.3 3.3 3.4 3.9 3.7 3.5 3.5 140.0 54.5 54.8 60.0 48.8 44.3 0 56.0 52.5 120.0 2011 2012 2013 2014 2015 2016 2017 100.0 Japanese wine Imported wine 80.0 6 60.0 113.2 110.7 112.

27. Slide 27: Jul-Sep Major new products

    ＜Jul- Sep Major new products＞ YEBISU Meister YEBISU#127 Kohaku YEBISU YEBISU Special edition Improved （Special edition） Appendix Japanese Alcoholic Beverages Black label Black label Special edition Special edition YEBISU Hanamiyabi Special edition Mugi to Hop brand Mugi to Hop Special edition (Limit

28. Slide 28: Jul-Sep Major new products

    ＜Jul- Sep Major new products＞ Appendix Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 28/43

29. Slide 29: Grande Polaire Wins Award

    Grande Polaire Wins Award  Grande Polaire Nagano Furusato Vineyard, Kifu 2011 and Grande Polaire Yamanashi Koshu Barrel Fermentation, 2016 both won Gold and top honors in their respective categories at the Japan Wine Competition 2017 http://www.sapporobeer.jp/news_release/0000021689/index.html Appe

30. Slide 30: International: Sleeman, U.S. soft drinks, Vietnam

    【SLEEMAN】 【U.S. soft drinks business】  Jan-Sep unchanged y-o-y *sales volume  Jan- Sep up ％ y-o-y （total demand down 2%) *sales revenue ＜Ｕ.S. soft drinks business Net Sales in Local Currency (Jan-Sep)＞ * before elimination of inter- company transactions 【Sapporo U.S.A.】 25  Jan- Sep up ％ y-o-y *s

31. Slide 31: Sleeman and Sapporo U.S.A. net sales

    ＜SLEEMAN：Net Sales in Local Currency (Jan-Sep) Sapporo brand sales volume *before elimination of inter- company transactions breakdown by geographic area 300 9% 250 6% 200 35% 2.82 4.62 20% 150 million 261 265 275 million 235 246 248 cases 100 198 205 cases 165 183 2012 50 ３Q 74% 56% 2017 0 ３Q 2008

32. Slide 32: Yebisu Beer launched in South Korea

    Yebisu Beer launched in South Korea  Launched Yebisu Beer in South Korea on September 7 (Thursday)  Imported beer market is growing in South Korea and Japanese beer is growing popular  The volume of our sales to South Korea has more than doubled compared with 2013  Introduced Yebisu Beer with th

33. Slide 33: Food & Soft Drinks business data

    【Lemon-based drinks】 【Lemon-based food products】  Jan- Sep up ％ y-o-y  Jan-Sep up ％ y-o-y 【Unsweetened tea drinks】 【Soups】  Jan- Sep up ％ y-o-y  Jan- Sep up ％ y-o-y 【Soy milk, chilled products】 【Coffee drinks】  Jan –Sep Net Sales approx. billion  Jan- Sep down ％ y-o-y Appendix ＜Japanese soft d

34. Slide 34: Food & Soft Drinks segment net sales

    ＜Food & Soft Drinks segment Net sales> ＜Food & Soft Drinks segment (billions of yen) (Jan- Sep) Net sales break down by geographic area＞ 120 ※April 2011 Consolidation of POKKA CORPORATION 100 85% 80 60 101.5 101.4 93.4 95.9 97.6 99.3 40 74.7 15% Appendix 20 39.7 28.6 23.5 25.4 Food & Soft Drinks 0 J

35. Slide 35: Pokka Create outlets

    【Pokka Create CO., Ltd.】  Jan- Sep Net sales billion up ％ y-o-y ＜New & refurbish outlets ＞ <Number of outlets as of September 30, 2017 : 193> 105 Appendix 51 East Japan Food & Soft Drinks 193 Central Japan West Japan 37 104 193 Directory operated 89 FC Copyright, 2017 SAPPORO HOLDINGS LTD. All righ

36. Slide 36: Jul-Sep Major New products: Soft drinks

    ＜Jul-Sep Major New products > Soft drinks Kireto Lemon Moisture 参考資料 Improved Appendix Unsweetened tea drink series Soy milk series Gabunomi series Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 36/43

37. Slide 37: Jul-Sep Major New products: Foods

    ＜Jul-Sep Major New products > Foods Jikkurikotokoto Soup series 参考資料 Appendix Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 37/43

38. Slide 38: Launch of miso leveraging group synergy

    Launch of miso leveraging group synergy  Shinsyu-ichi Miso Co., Ltd. launched miso containing lactic acid bacterium (September 1)  Blended plant-based lactic acid bacterium SBL88, found after years of research by Sapporo Breweries Appendix Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved.

39. Slide 39: Restaurants: Sapporo Lion outlets

    (billions of yen) Trends of net sales and number of ＜Sapporo Lion outlets ＞ Sapporo Lion Outlets As of Sep 30, 2017 25.0 220 20.0 200 195 194 186 188 9 8 15.0 177 173 180 14 Tokyo Metroporitan 168 160 5 Kanto(excl.Tokyo) 10.0 19.3 19.6 19.0 18.9 18.7 19.0 Hokkaido 17.9 173 140 Tohoku 5.0 120 Nagoya

40. Slide 40: Major rental properties & occupancy rates

    ＜Major rental properties & occupancy rates：（Averages for 2017 3Q ) ＜Information about Real Estate for lease＞ Occupancy (billions of yen) Site area Floor area 450.0 rate No. of floors （㎡） （㎡） （%） 400.0 40 floors above 350.0 Yebisu Garden Place（1） 56,943 298,007 98 ground, 5 below 300.0 12 floors abov

41. Slide 41: Various Initiatives by the Sapporo Group

    Various Initiatives by the Sapporo Group  Nagoya City Bureau of Tourism, Culture & Exchange, Sapporo Breweries Ltd. and Sapporo Holdings Limited sign a partnership agreement for promoting Reims, France (photo) -To implement collaborative projects including community-linked cooperation starting at S

42. Slide 42: Various Initiatives by the Sapporo Group

    Various Initiatives by the Sapporo Group  The 9th Yebisu Beer Festival -Theme: The beer festival in the city for adults- http://www.sapporoholdings.jp/news_release/0000020387/pdf/2017matsuri.pdf  Spending part of sales at Yebisu Beer Festival for kids’ baseball teams in Kesennuma City Donated 250

43. Slide 43: Forward-looking statements closing slide

    As an intrinsic part of people's lives, Sapporo will contribute to the evolution of creative, enriching and rewarding lifestyles. The earnings forecasts and forward‐looking statements appearing in this document were prepared by the SAPPORO Group based on currently available information and its best

Sapporo Holdings — Q3 2017 Earnings Presentation on 6ix