Sapporo Holdings Limited · TSE:2501

Sapporo — H1 2018 Earnings Presentation

48 slides from Sapporo's earnings presentation, Aug 3, 2018

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

    Sapporo Group Business Results Presentation for the Six Months Ended June 30, 2018 August 3, 2018 URL http://www.sapporoholdings.jp/english Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 1/48

  2. Slide 2: Agenda

    1. Measures Against Issues and Progress・・p3-6 (1) Overseas (Alcoholic beverages in Vietnam, soft drinks in North America and Asia) (2) Japan (changes in alcoholic beverage market and responses) 2. Second-Quarter 2018 Highlight ・・・p7-24 3. Revision of 2018 Full-Year Earnings Forecasts・・p25, 26 Append

  3. Slide 3: Measures Against Issues and Progress (1) Overseas

    Measures Against Issues and Progress (1) Overseas <Key issues> <Progress> <Measures> Promotion of structure reforms The structure reforms are - Review of the distributor network Alcoholic beverages in Vietnam - Review of sales promotion investment progressing smoothly and profit - Optimization of gl

  4. Slide 4: (2) Changes in Japanese Alcoholic Beverages Market

    (2) Changes in Japanese Alcoholic Beverages Market Taxable shipping volume (KL) <Changes in taxable shipping volume and related data> 8,000,000 130,000 Point 1 Beer, beer type beverages 128 million people Unification of Beer demand continued to decline, but it is liquor taxes for Japanese beer and b

  5. Slide 5: (2) Changes in Japanese Alcoholic Beverages Market

    (2) Changes in Japanese Alcoholic Beverages Market Main factor 1 <YoY changes in total demand for beer and beer-type beverages (sales volume, total)> Shrinking market as expected at the beginning of the year Store prices increase due to Liquor Tax Act March, April 2018 Main factor 2 revision Beer co

  6. Slide 6: (2) Action to Changes in Japanese Alcoholic Beverage Market

    (2) Action to Changes in Japanese Alcoholic Beverage Market <Changes in the market> <Sapporo’s measures> Assumes recurrence of Strengthen beer brands beer demand Demand for new genre Relaunch of Mugi to Hop continues to be high Launch of LEVEL 9 New craft beer brand Diversification of taste intensif

  7. Slide 7: Second-Quarter 2018 Highlight

    Second-Quarter 2018 Highlight Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 7/48

  8. Slide 8: Second-Quarter 2018 Highlight

    2018 Second-Quarter 2018 Highlight 2Q Hard fight in new genre and canned coffee, categories with low priority in the medium- to long-term Despite severe business results, we will give priority to growth of focal fields and continue with investments (billions of yen) Profit attributable to Revenue Op

  9. Slide 9: Second-Quarter 2018 Highlight

    2018 Second-Quarter 2018 Highlight 2Q Cash basis (billions of yen) Balance of net debt Equity investment 2017 2Q（IFRS） 2017 2Q（IFRS） 2018 plan 2018 2Q（IFRS） 2018 2Q（IFRS） D/E ratio times *See p.20, 21 for the details of the balance sheet *See p.22 for details Group Management Platform Group Topics 

  10. Slide 10: Revenue by Segment

    2018 Revenue by Segment ２Q Differences arising YoY changes YoY changes ①：2017 ２Q ②：2017 ２Q ③：2018 ２Q % （IFRS） from transfer to （IFRS） amount (billions of yen) （J GAAP) IFRS②-① （③-②） （③-②） Consolidated Revenue 258.0 (7.3) (3.6) % Japanese Alcoholic Beverages* 128.6 (9.4) (4.8)% (Rebate deduction▲9.4)

  11. Slide 11: Main Factors Contributing to Changes in Revenue

    2018 Main Factors Contributing to Changes in Revenue 2Q : The main factors behind revenue decline are Japanese beer = Increase and beer-type beverages and soft drinks in Japan and elsewhere = Decrease Food & Soft (billions of yen) Japanese Alcoholic Restaurants Real Beverages International Drinks Es

  12. Slide 12: Operating Profit by Segment

    2018 Operating Profit by Segment 2Q Differences arising YoY changes ①：2017 2Q ②：2017 2Q ③：2018 2Q from transfer to （IFRS） amount （J GAAP） （IFRS） (billions of yen) IFRS②-① （③-②） Consolidated Operating Profit 3.0 (1.9) (Real-estate tax▲1.3) Japanese Alcoholic Beverages* 1.6 (1.0) (Depreciation and amo

  13. Slide 13: Main Factors Contributing to Changes in Operating Profit

    2018 Main Factors Contributing to Changes in Operating Profit 2Q : Main factor of profit decline is the revenue decline in Japanese alcoholic = Increase beverages = Decrease Continued smooth progress in the structure reforms Japanese Alcoholic in Vietnam Food & Soft Real International Drinks Restaur

  14. Slide 14: Japanese Alcoholic Beverages

    Japanese Alcoholic Revenue YoY IFRS Operating YoY 2018 change Beverages profit change *YoY change is on an IFRS basis 2Q <YoY changes in sales volume of 115 Black Label brand products> *Cumulative Positive 110  Black Label brand continued to grow. 105 Cans were up % year on year 100  RTD was up %

  15. Slide 15: Taking on the Challenge in the RTD Market

    Japanese Alcoholic 2018 ⇒Taking on the Challenge in the RTD Market Beverages 2Q Up Achieved 8.9 ％ 20% of the year on year plan in 1 week 65万c/s 650,000 40万c/s 400,000 60万c/s 600,000 30万c/s 300,000 55万c/s 20万c/s 200,000 550,000 50万c/s 10万c/s 100,000 500,000 2017年 2018年 3⽉ Mar 4⽉ May Apr 5⽉ Jun 6⽉ Up

  16. Slide 16: International

    YoY IFRS YoY 2018 International Revenue change Operating change profit *YoY change is on an IFRS basis 2Q <Changes in overseas beer sales volume (cumulative from Jan-Jun every year> 700 (unit: 10,000 cases, large bottle count) Positive  Sleeman sales continued to increase 600 Entering the RTD marke

  17. Slide 17: Food & Soft Drinks

    YoY IFRS 2018 Food & Soft Drinks Revenue change Operating YoY profit change *YoY change is on an IFRS basis 2Q  Sales of lemon-based products and tea drinks, on <YoY change in sales volume of lemon-based products> Positive which we focus, were strong 120 *Cumulative Sales volume of lemon-based prod

  18. Slide 18: Restaurants and Real Estate

    YoY YoY Revenue Revenue change change Restaurants IFRS YoY Real Estate IFRS YoY Operating change Operating change profit profit Positive  While steep rise in ingredient prices Positive and difficulties in acquiring human resources continue, we offset their impact with cost control and  Mainstay pr

  19. Slide 19: Special Factors in the Business Results

    2018 Special Factors in the Business Results 2Q  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 +¥1.4 billion Food

  20. Slide 20: Changes in Balance Sheets

    2018 Changes in Balance Sheets 2Q : Total assets declined ¥20.8 billion compared with the end of the previous year Total assets Total assets Cash and cash equivalents (billions of yen) 12.5 9.8 Trade receivables →Seasonal factors, etc. 98.3 81.7 Current assets Inventories 37.9 40.0 16.0 14.5 Other c

  21. Slide 21: Changes in Balance Sheets: Liabilities and Equity

    2018 Changes in Balance Sheets 2Q ：Total liabilities down by ¥6.9 billion, total equity down by ¥13.9 billion compared with the end of the previous year Total liabilities and Trade payables equity Total liabilities and equity (billions of yen) Short-term financial liabilities 36.5 35.8 80.7 74.0 Cur

  22. Slide 22: Financial Status

    2018 Financial Status 2Q  Cash basis investment totaled ¥15.1 billion （billions of yen） ①<Capital expenditure> <Consolidated cash flow statements> 2017 2Q 2018 2Q Change % about ¥ billion in consolidated total (tangibles, intangibles) Cash flow from operating 18.2 11.1 (7.2) -39.4% activities <Majo

  23. Slide 23: Transformation of the Group Management Platform

    2018 Transformation of the Group Management Platform 2Q Full-fledged start of long-term observational intervention research of lemon’s R&D health effects at Osakikamijima-cho in Hiroshima Prefecture -Study of health condition with continuous lemon consumption over 5 years- Started a 5-year long-term

  24. Slide 24: Transformation of the Group Management Platform

    2018 Transformation of the Group Management Platform 2Q Personnel, human Most popular companies for 2019 graduates resources -Sapporo Breweries Ltd. jumped to 32 from last year’s 189 Japan’s largest word-of-mouth employment information website Rakuten Everybody’s Employment Diary (aka Minshu) announ

  25. Slide 25: Revision of 2018 Full-year Earnings Forecasts

    Revision of 2018 Full-year Earnings Forecasts Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 25/48

  26. Slide 26: Revision of 2018 Full-Year Earnings Forecasts

    2018 Revision of 2018 Full-Year Earnings Forecasts 2Q  Revenue: ¥18.0 billion decline from the initial plan 2018 2018 Revised Revised 2017 Results Change <Japanese Alcoholic Beverages> Initial forecast by - Taking into account reduction in number of cases sold, forecast revenue forecast was cut by

  27. Slide 27: Appendix: Reference Materials (FY2018 2Q)

    Appendix: Reference Materials (FY2018 2Q) Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 27/48

  28. Slide 28: Appendix: Japanese Alcoholic Beverages

    Appendix Japanese Alcoholic Beverages Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 28/48

  29. Slide 29: Japanese Alcoholic Beverages: Sales Volume

    【Beer】（sales volume） ＜Y-o-y change in sales volume of Jan- Jun down ％ y-o-y 3 core brands> % （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 【Happoshu and New genre】（sales volume） 75 Appendix Jan F

  30. Slide 30: Beer and Beer-Type Beverages Sales Volume

    ＜Beer and beer-type beverages category Jan- Jun sales volume y-o-y change (Shipment base) (10,000 cases) 3,000 2,500 2,000 1,500 ＜Beer lineup (Jan– Jun) breakdown＞ 1,000 13% 500 Appendix 0 2012 2013 2014 2015 2016 2017 2018 Japanese Alcoholic Beer, Happoshu and New Genre Beer Happoshu and New Genre

  31. Slide 31: Net Sales by Category

    8.0 (billions of yen) ＜Jan- Jun Net Sales＞ (billions of yen) 6.0 ※incl. liquor tax 120 4.0 3.1 3.3 3.5 3.4 3.6 3.7 3.5 100 2.0 28.9 2.3 2.3 2.7 2.5 2.4 2.4 2.3 35.4 33.4 38.4 33.3 31.8 25.2 0.0 80 2012 2013 2014 2015 2016 2017 2018 60 Japanese wine Imported wine 4.0 40 76.3 3.0 68.0 69.2 68.0 67.8 7

  32. Slide 32: RTD Market Grew Significantly by Almost 10%

    RTD Market Grew Significantly by Almost 10% Strong-type RTD Reaching Almost 60% of Market RTD market size Share by alcohol percentage 7,500万c/s 75 million YoY 100% up 9.5% 14% 12% 11% 9% 90% 17% 7,000万c/s 70 million 80% 6,500万c/s 65 million 33% 33% 70% 33% 34% 35% Appendix 6,000万c/s 60 million 60% 5

  33. Slide 33: 2018 Apr-Jun Major New Products: Beer

    ＜2018 Apr-Jun Major new products＞ Beer, Happoshu and New genre *incl. improved products YEBISU Hanamiyabi” YEBISU Shizuoka Bakushu Special Edition Can CLASSIC 2018 Fuumisokainishite THE HOP 2018 5th Year Anniversary Can YEBISU Natsu no soukai Special Edition Can Fatherʼs Day Label Appendix Japanese

  34. Slide 34: 2018 Apr-Jun Major New Products: RTD and Wine

    ＜2018 Apr- Jun Major new products＞ Non- alcoholic beer, RTD, Wine and Japanese liquor Kireto lemon sour Ai no Skal Mugi no Kutsurogi Multivitamin Lemon sour (Non- alcoholic beer) (RTD) (RTD) Rirakusu (from left) Appendix Apple vinegar flavor, Lemon vinegar flavor, Grape vinegar flavor, Orange vinega

  35. Slide 35: Sapporo WHITE BELG Superior Taste Award

    Won the Superior Taste Award 3 Stars, the Highest Rank, for the 5th Consecutive Year with Sapporo WHITE BELG! Sapporo WHITE BELG won the highest ranked Superior Taste Award 3 stars, awarded by the International Taste and Quality Institute (iTQi), based in Brussels, Belgium, to products that are cons

  36. Slide 36: Expanding the Sapporo Draft Beer Black Label Contacts

    Expanding the Sapporo Draft Beer Black Label Contacts “Perfect Black Label” focuses on three Cs of quality standards of CREAMY, CLEAR and COLD. We have made it into the perfect black label, which lets you feel the deliciousness of draft even more. THE PERFECT BEER GARDEN 2018 OSAKA THE PERFECT DAYS

  37. Slide 37: Joint Modal Shift in Kansai – Chugoku/Kyushu

    Start of Joint Modal Shift in Kansai – Chugoku/Kyushu Estimates CO2 Emission Reduction of About 1,500t (About 74% Compared to Existing Figures) Sapporo Breweries Ltd., Kirin Brewery Co., Ltd., Suntory Beer Ltd. and Asahi Breweries, Ltd. agreed to a joint modal shift in in-house transportation in the

  38. Slide 38: International: Overseas Brands and US Soft Drinks

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

  39. Slide 39: International: Sleeman and Sapporo U.S.A.

    ＜SLEEMAN：Net Sales in Local Currency (Jan- Jun) Sapporo brand sales volume *before elimination of inter- company transactions breakdown by geographic area 300 9% J GAAP IFRS 250 （Excluded liquor tax） （Included liquor tax） 6% 35% 200 3.05 2.23 150 244 27% million 236 million 100 （※） cases 154 156 163

  40. Slide 40: Food & Soft Drinks: Product Categories

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

  41. Slide 41: Food & Soft Drinks Segment Net Sales

    ＜Food & Soft Drinks segment Net sales> (Jan- Jun) ＜Food & Soft Drinks segment Net sales break down by geographic area＞ (billions of Yen) ＊April 2011 Consolidation of POKKA CORPORATION * before elimination of inter- company transactions 70 ※IFRS 60 50 84% 40 ※ ※ 30 60.7 62.7 63.9 64.9 62.8 59.6 59.5

  42. Slide 42: Pokka Create Outlets

    【Pokka Create CO., Ltd.】  Jan- Jun Net sales billion unchanged y-O-y <Number of outlets as of June 30, 2018 : 203> ＜New & refurbish outlets ＞ 112 Appendix 52 203 East Japan Food & Soft Drinks Central Japan outlets West Japan Increased 11 outlets compared with 2017 2Q （East +7, Central＋2,West+2） 39

  43. Slide 43: Establishment of Hybrid Plant for Cup-based Soups

    Establishment of Hybrid Plant for Cup-based Soups The Group started selling canned soups in 1980, and in 1981 entered the powdered instant soup market in earnest, and has been expanding its soup business ever since. While the business has been growing steadily as the company offers products that ref

  44. Slide 44: Restaurants: Sales and Outlets

    Trends of net sales and number of ＜Sapporo Lion outlets ＞ (billions of yen) Sapporo Lion Outlets *before rebate deduction As of June 30, 2018 15.0 192 200 186 188 179 190 8 9 170 174 170 180 14 Tokyo Metroporitan 10.0 170 160 4 Kanto (excl.Tokyo) 150 Hokkaido 11.8 12.1 11.8 11.8 11.5 11.9 11.3 140 1

  45. Slide 45: Major Rental Properties and Occupancy Rates

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

  46. Slide 46: Various Initiatives by the Sapporo Group

    Various Initiatives by the Sapporo Group  Selected as a member of the SNAM Sustainability Index again in 2018 -Sapporo Group’s ESG-related initiatives have been highly rated- http://www.sapporoholdings.jp/news_release/0000020442/index.html (Japanese)  Selected as a 2018 Competitive IT Strategy Com

  47. Slide 47: Memo

    ＜Memo＞ Copyright, 2018 SAPPORO HOLDINGS LTD. All rights reserved. 47/48

  48. Slide 48: Sapporo will contribute to the evolution of creative, enriching and rewarding 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. 48/48

Sapporo Holdings — H1 2018 Earnings Presentation on 6ix