Slide 1: Sapporo Group Business Results Presentation for the Six Months Ended June 30, 2016
2016 Sapporo Group Business Results Presentation for the Six Months Ended June 30, 2016 August 4, 2016 Sapporo Holdings Ltd. URL http://www.sapporoholdings.jp/english Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved. 1/39
Slide 2: Contents
Contents 1. Overview of First-Half 2016 Results 2. Towards Third- and Fourth-Quarters 2016 3. Vision of Medium-term Portfolio Appendix: Collection of Data by Business Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved 2/39
Slide 3: 1. First-Half 2016 Topics
1. First-Half 2016 Topics Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved 3/39
Slide 4: First-Half 2016 Results Overview
First-Half 2016 Results Overview Earnings: operating income improves ¥4.3 billion y-o-y Operating income improved across all segments, (billions of yen) 2015 2Q 2016 2Q change returning to profit for the first time in 2 years Net sales 245.8 248.9 3.0 In addition to the increased topline, we are
Slide 5: First-Half 2016 Topics (1): Japanese Alcoholic Beverages
First-Half 2016 Topics (1): Japanese Alcoholic Beverages Japanese beer business Sales concentrated on core brands; sales volume of beer and beer-type beverages up 1% y-o-y % Y-o-y change in sales volumes of 3 core brands <Beer> up 6% y-o-y (total demand unchanged y-o-y) Jan :Yebisu Black Label Bra
Slide 6: First-Half 2016 Topics (2): International
First-Half 2016 Topics (2): International North American beer business performed well, Vietnamese business started recovering in 2Q North American beer business U.S. soft drinks business Jan-Jun net sales North American beer sales volume for Jan-Jun (y-o-y) Country Pure Foods, Silver Spring Citrus
Slide 7: First-Half 2016 Topics (3): Food & Soft Drinks
First-Half 2016 Topics (3): Food & Soft Drinks Domestic food and soft drinks Improving management efficiency through product mix improvement, cost reduction Y-o-y change in Jan-Jun Y-o-y change in Jan-Jun soft drink sales volume <Domestic soft drinks> Sales volume and sales value unchanged y-o-y foo
Slide 8: First-Half 2016 Topics (4): Restaurants
First-Half 2016 Topics (4): Restaurants Restaurants business in Japan Enhancing earnings capability through structural reforms; to take on the challenge of starting a new format in 2016 Trends of net sales and number of billion Sapporo Lion outlets Number Sapporo Lion yen of Outlets Comparable-store
Slide 9: First-Half 2016 Topics (5): Real Estate
First-Half 2016 Topics (5): Real Estate Rental properties <Yebisu Garden Place> Inaugurated in October Continues to maintain high occupancy rate 2014 Yebisu First Square Also working on improving rent levels of the existing tenants Yebisu Garden Place Fully operational and making full-year Value
Slide 10: 2016 2Q Results Highlight
2016 2Q Results Highlight (billions of yen) Consolidated financial YoY changes 2015 2Q 2016 2Q results (amount, %) Net sales(incl. liquor tax) 245.8 248.9 3.0 1.3% Net sales（excl. liquor tax) 194.6 195.7 1.1 0.6% Overseas net sales to total 24.3 ％ 21.9％ (2.3) ー (excl. liquor tax) Operating income (1
Slide 11: Overview of First-Half 2016 Results (1) Special Factors
Overview of First-Half 2016 Results (1) Special Factors <Special factors in the business results (year-on-year)> (―: negligible) Operating income Business segment Details Sales impact impact 2015: Silver Spring Citrus account period change (changed from Oct 2015 to Sep 2016 -> Jan 2016 to Dec 2016)
Slide 12: Overview of First-Half 2016 Results (2) Net Sales by Segment
Overview of First-Half 2016 Results (2) Net Sales by Segment YoY change （billion of yen） 2015 2Q 2016 2Q Notes （amount,%） Consolidated 245.8 248.9 3.0 1.3％ net sales Japanese Alcoholic 121.6 125.7 4.0 3.4％ Beverages Foreign exchange rates (average rate of 2016 2Q) International 34.7 31.6 (3.1) (9.1)
Slide 13: Overview of First-Half 2016 Results (3) Factors Contributing to Change in Net Sales
Overview of First-Half 2016 Results (3) Factors Contributing to Change in Net Sales <Main Factors Contributing to Changes in Net Sales> Progress in 2Q Progress in 1Q [billions of yen] RTD・ Increase Decrease Increase Decrease Happoshu Wine・ New New genre beer Japanese consolidation sales volume 2016
Slide 14: Overview of First-Half 2016 Results (4) Operating Income by Segment
Overview of First-Half 2016 Results (4) Operating Income by Segment （billion of yen） 2015 2Q 2016 2Q Change Notes Consolidated Operating income (1.2) 3.0 4.3 Japanese Alcoholic Beverages (0.6) 1.4 2.0 Beer and related product (2.1) (0.3) 1.8 Marginal profit+1.4,Fixed cost and other+0.4 Wine and spir
Slide 15: Overview of First-Half 2016 Results (5) Factors Contributing to Changes in Operating Income
+ Overview of First-Half 2016 Results 4.3 bn (5) Factors Contributing to Changes in Operating Income Up 2016 2Q ＜ Main Factors Contributing to Changes in Operating Income ＞ consolidated Progress in 2Q Progress in 1Q ［billions of yen］ operating income 3.0 Increase Decrease Increase Decrease YGP billi
Slide 16: Overview of First-Half 2016 Results (6) Changes in Extra Ordinary Gains and Losses
Overview of First-Half 2016 Results (6) Changes in Extra Ordinary Gains and Losses Consolidated Statements of Income （billion of yen） 2015 1Q 2016 1Q Change Primary Reasons Net sales 245.8 248.9 3.0 Operating income (1.2) 3.0 4.3 Financial account balance (0.3) (0.2) 0.1 Other non-operating expenses
Slide 17: Overview of First-Half 2016 Results (7) Cash flows
Overview of First-Half 2016 Results (7) Cash flows Condensed Consolidated Statements of Cash Flows （billions of yen） Six Months Six Months ended June 30, ended June 30, Change Change (%) 2015 2016 Cash flows from operating activities 14.6 14.8 0.1 (0.9)% Cash flows from investing activities ※ 1.1 (1
Slide 18: Overview of First-Half 2016 Results (8) Balance sheets
Overview of First-Half 2016 Results (8) Balance sheets Condensed Consolidated Balance Sheets (billions of yen) December 31, 2015 June 30, 2016 Change Primary Reasons Current assets 156.3 145.1 (11.1) Cash and cash equivalents 10.4 12.4 2.0 Notes and accounts receivable - trade 92.3 74.8 (17.5) Seaso
Slide 19: 2. Towards Third- and Fourth-Quarters 2016
２. Towards Third- and Fourth-Quarters 2016 Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved 19/39
Slide 20: 2016 Full-Year Forecast (No Change to Initial Plan)
2016 Full-Year Forecast (No Change to Initial Plan) We will consider revision in response to foreign exchange fluctuations (billions of yen) (the yen’s appreciation) taking into account the degree of its impact YoY changes Consolidated financial results 2015results 2016targets (amount, %) Net sales(
Slide 21: Vietnam Beer Market and Second-Half Strategy (1)
Vietnam Beer Market and Second-Half Strategy (1) We entered Vietnam in 2011 with the establishment of a brewery and are currently entering the second stage. Change in beer sales volume Relaunch in November in Vietnam Flavor: Retain Sapporo’s original flavor, Main market pursue ease of drinking Ho
Slide 22: Vietnam Beer Market and Second-Half Strategy (2)
Vietnam Beer Market and Second-Half Strategy (2) The beer market in Vietnam is expected to continue expanding, although the rate of growth will slow down slightly Source: Ministry of Industry and Trade, Vietnam Changes in domestic beer Unit: 1,000 kl +5%/year +2%/year production in Vietnam Beer co
Slide 23: Vietnam Beer Market and Second-Half Strategy (3)
Vietnam Beer Market and Second-Half Strategy (3) Products in the medium price range are growing rapidly, partly reflecting economic environment and other companies’ strategies Changes in beer sales breakdown Data source: Nielsen , excluding MT by price in Vietnam The image of store price of a 330 ml
Slide 24: Vietnam Beer Market and Second-Half Strategy (4)
Vietnam Beer Market and Second-Half Strategy (4) Launch of a new product in the medium price range market BLUE CAP, introduced on July 28, 2016 New product of Sapporo Vietnam Ltd. Expand the brand portfolio and enter into the volume zone Limited to 330 ml cans Assuming a target different fro
Slide 25: Development of U.S. Soft Drinks Business
Development of U.S. Soft Drinks Business Country Pure Foods plant Acquisition of the frozen 100% fruit juice Silver Spring Citrus plant business from Ridgefield’s No. 2 in the frozen fruit juice/ice cream market for Plant locations school meals Willington, Connecticut Gained development and prod
Slide 26: Real Estate Development in Ginza and Sapporo
Real Estate Development in Ginza and Sapporo Floor Shops and restaurants Overview 11 Kobe Plaisir Ginza Kobe beef steak restaurant To open on September 24 10 SGC (tentative name) Jewelry purchase and sales 8, 9 To be announced as needed Thierry Marx, French restaurant, bistro, 7 BISTRO MARX cafe 4-6
Slide 27: 3. Vision of Medium-term Portfolio
３. Vision of Medium-term Portfolio Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved 27/39
Slide 28: Vision of Medium-Term Business Portfolio (1) Current business portfolio
Vision of Medium-Term Business Portfolio (1) Current business portfolio Growth Further segmented the existing business segments and potential plotted them Japan Overseas The issue is that the businesses have low profitability in *The size of the circle general reflects the size of the business V
Slide 29: Vision of Medium-Term Business Portfolio (2) Direction of medium-term investment
Vision of Medium-Term Business Portfolio (2) Direction of medium-term Investment for sales expansion Growth investment Investment for potential To invest actively in promising market enhancing profitability The main direction of investment in Japan is to enhance profitability Vietnam Southeast A
Slide 30: Vision of Medium-Term Business Portfolio (3) Business portfolio goal in the medium term
Vision of Medium-Term Business Portfolio (3) Business portfolio goal in the medium term Growth potential Vietnam Southeast Asian soft drinks Japanese food Wine, RTD North Japanese American beer soft drinks U.S. soft drinks Restaurants Japanese liquor Japanese Real beer estate Profitability Copyright
Slide 31: Appendix: Collection of Data by Business
Appendix： Collection of Data by Business Copyright, 2016 SAPPORO HOLDINGS LTD. All rights reserved. 31/39
Slide 32: 2016 2Q: Major Sales and Sales Volume (YoY)
2016 2Q:Major Sales and Sales Volume (YoY) (10,000 cases) Alcoholic Beverage (Japan) Beer (International) (10,000 cases) Jan. 1 - Jan. 1 - Jan. 1 - Jan. 1 - YoY YoY Jun.30, 2015 Jun.30, 2016 Jun.30, 2015 Jun.30, 2016 SLEEMAN BREWERIES LTD.（*2） 604 606 100% Sapporo Draft Beer Black Label 730 764 105%
Slide 33: Reference Material (1) Japanese Alcoholic Beverages
Reference Material (1) Japanese Alcoholic Beverages Beer and Beer-Type Beverages Data <Beer and beer-type beverages category <Beer lineup (Jan-Jun breakdown)> (10,000 cases) Jan-Jun sales volume YoY change (Shipment base)> 13.23 million Cases (1) Sapporo Lager Beer: Japan’s oldest heat treated beer.
Slide 34: Reference Material (2) Japanese Alcoholic Beverages Beer Category Data
Reference Material(2) Japanese Alcoholic Beverages ～Beer Category Data～ ＜Jan〜Jun Net sales> （billions of yen) Wine Beer + Beer type beverages (incl. liquor tax) Spirits Japanese Liquor Promotion of diversification of product offering ＜Japanese Alcoholic Beverage Business Jan-Jun sales breakdown by c
Slide 35: Reference Material (3) International Business Data
Reference Material(3) International Business ～Data ～ ＜Trend of overseas sales volume of SAPPORO brand products (Jan-Jun)> SLEEMAN Net Sales in Local Currency (Jan-Jun) (before elimination of inter-company transactions) （1,000 cases) Sapporo USA Net Sales in Local Currency (Jan-Jun) (before eliminati
Slide 36: Reference Material (4) Food & Soft Drinks Data
Reference Material(4) Food & Soft Drinks ～ Data ～ <Soft Drinks (Japan): POKKA SAPPORO Food & Beverage Ltd.> Japanese soft drinks sales Japanese soft drinks sales POKKA SAPPORO Food & composition by sales channel volume composition by genre ＜Lemon-based Beverage sales composition (Jan–Jun) (Jan-Jun)
Slide 37: Reference Material (5) Restaurants Data
Reference Material(5) Restaurants ～ Data ～ ＜New Sanko Outlets＞ ＜Sapporo Lion outlets＞ 9outlets located in Hokkaido 173 Outlets (Sapporo, Otaru) Jan-Jun 2016: Open 1 outlet ＜Marushinkawamura Outlets＞ ※2 18 outlets located in Hokkaido (Sapporo) and Tokyo ※1 ＜Outlet expansion in Singapore＞ 14 outlets ・
Slide 38: Reference Material (6) Real Estate Data
Reference Material(6) Real Estate ～ Data ～ Major rental properties & occupancy rates * (*Averages for 2016 2Q (contract basis) Information about real estate for lease Major rental properties in Occupancy rate Site area (m2) Floor area (m2) (%) No. of floors Tokyo’s 23 wards 40 floors above Balance s
Slide 39: 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. 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