Sapporo Holdings Limited · TSE:2501

Sapporo — Q1 2017 Earnings Presentation

43 slides from Sapporo's earnings presentation, May 11, 2017

1. Slide 1: Sapporo Group Business Results Presentation for the Three Months Ended March 31, 2017

   Sapporo Group Business Results Presentation for the Three Months Ended March 31, 2017 May 11, 2017 URL http://www.sapporoholdings.jp/english Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 1/40

2. Slide 2: Contents

   Contents １．2017 1Q Results 2． Overview of each business Appendix：Collection of Data by business Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 2/40

3. Slide 3: Highlight

   (billions of yen) 2016 １Q 2017 1Q YoY changes (amount, %) Net sales (incl. liquor tax) 111.3 117.7 6.3 5.7% Net sales (excl. liquor tax) 88.8 94.9 6.0 6.8% Overseas net sales to total (excl. liquor tax) 23.4 ％ 23.5 ％ 0.2 - Operating income (1.4) (1.4) (0.0) - First-Quarter Operating income before go

4. Slide 4: Group Executive Summary

   Sales increased ¥6.3 billion; operating income remained unchanged y-o-y (billions of yen) Net Sales YoY change  Steadfast growth in strong business fields (Yebisu, Black Label, North America, lemon, Ginza Lion, YGP, etc.) *YGP: Yebisu Garden Place First-Quarter 2017 Operating income YoY change  Sa

5. Slide 5: Overview by Business Segment

   Net Sales at all businesses increased; Profit declined at 3 segments incl. Japanese Alcoholic Beverages due to upfront investment (billions of yen) Japanese Food & Soft Alcoholic International Drinks Restaurants Real Estate Beverages First-Quarter 2017 Overview by Net Sales Business Segment Operatin

6. Slide 6: Net Sales by Segment

   (billions of yen) YoY changes 2016.1Q 2017.1Q (amount, %) Consolidated Net sales 111.3 5.7％ Japanese Alcoholic Beverages 53.1 2.5％ International 15.4 7.8% Net Sales by Segment Food & Soft Drinks 30.2 4.4% Restaurants 5.7 11.4% Real Estate 5.3 9.7% Other 1.4 94.8% Copyright, 2017 SAPPORO HOLDINGS LTD

7. Slide 7: Main Factors Contributing to Changes in Net Sales

   Net sales grew in mainstay products and services of each business Japanese Alcoholic Food & Soft Beverages International Drinks Restaurants Real Estate 2017 (billions of yen) Main Factors Contributing to Changes in Net Sales 2016 = Increase = Decrease Copyright, 2017 SAPPORO HOLDINGS LTD. All rights

8. Slide 8: Operating Income by Segment

   (billions of yen) 2016 1Q 2017 1Q YoY changes Consolidated operating income (1.4) Japanese Alcoholic Beverages (1.8) International (0.3) Food & Soft Drinks (0.6) Restaurants (0.1) Operating Income Real Estate 2.6 by Segment Other (0.0) General corporate and intercompany (0.9) eliminations Amortizati

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

   Operating income remained unchanged y-o-y as fixed costs increased due to brand enhancement, etc. Japanese Food & Soft Alcoholic International Drinks Restaurants Real Estate Beverages (billions of yen) 2016 2017 [Breakeven] Main Factors Contributing to Changes in Operating Income = Increase = Decrea

10. Slide 10: Overview of Each Business

    Overview of Each Business Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 10/40

11. Slide 11: Japanese Alcoholic Beverages: Investment in beer brands

    Made investment in beer brands from 1Q  Active brand investment primarily in Black Label and Yebisu Japanese Alcoholic (Hanamiyabi launched) Positive Beverages Beer maintained growth momentum (Black Label sales volume % y-o-y, Yebisu %, beer total %)  Beer’s component ratio increased, product mix

12. Slide 12: Japanese Alcoholic Beverages

    Japanese Alcoholic Beverages （(billions of yen) YoY Net Sales change （Reference) *Estimates Total Beer down demand : Happoshu down New genre up Beer Happoshu, new genre RTD, wine, Japanese liquor, etc. Operating YoY income change *Estimates Total Beer sales volume Happoshu, new genre Product mix, In

13. Slide 13: International: Beer sales in North America strong

    Beer sales in North America have been strong; soft drinks are led by CPF; uphill fight in Vietnam International  The business in North America continued to grow with brand and Positive personnel investments (Sales volume at Sleeman % y-o-y, Sapporo brand at Sapporo USA % y-o-y)  At CPF, food servi

14. Slide 14: International

    International （(billions of yen) YoY Net Sales change （Reference) *Estimates Total Canadian beer demand : down about U.S. beer down about North American North American soft Vietnam Exports, other alcoholic beverages drinks Operating YoY income change *Estimates Sales increase, product mix, etc. Incr

15. Slide 15: Food & Soft Drinks: Lemon-based products and tea drinks strong

    Sales of lemon-based products and tea drinks were strong  Lemon-based products, where our strength lies, grew significantly in terms of both soft drinks and food products Food & Soft Drinks (Lemon-based soft drinks sales volume ％ y-o-y, lemon-based food products ％) Positive  Strategy to differenti

16. Slide 16: Food & Soft Drinks

    Food & Soft Drinks （(billions of yen) YoY Net Sales change （Reference) *Estimates Domestic soft drinks Total up demand : Lemon-based products up Japanese food & soft drinks Overseas food & soft drinks Instant soups up Operating YoY income change *Estimates Sales incease, product Increase in sales In

17. Slide 17: Restaurants: Sales strong; profit declined

    Sales were strong; profit declined due to increase in fixed cost such as personnel expenses Restaurants Positive  Nonconsolidated sales of Sapporo Lion were steady (Comparable-store sales y-o-y) (billions of yen) Sales YoY  Marushinkawamura, acquired in 2016, also performing well change (Net incre

18. Slide 18: Real Estate: Stable operation of mainstay properties

    Stable operation of mainstay properties contributed to sales and profits Real Estate Positive  Yebisu Garden Place (YGP) maintained stable occupancy rate （Jan-Mar total occupancy rate %) (billions of yen) Sales YoY change  Ginza Place, inaugurated in September 2016, contributed to sales and profit

19. Slide 19: Special Factors in the Business Results

    Difference in consolidated period of 2 group companies Impact of exchange rates negligible <Special factors> Impact on Impact on Business segment Details operating sales income Marushinkawamura Inc.: consolidation began Approx. Restaurants in June 2016 - ¥0.5 billion Miyasaka Jozo Co., Ltd.: consoli

20. Slide 20: Changes in Other Income and Expenses

    No significant factors affecting Other Income and Expenses (billions of yen) 2016 1Q 2017 1Q Change Primary Reasons Operating income (1.4) (1.4) (0.0) - Financial account balance (0.3) (0.3) 0.0 - Other non-operating expenses (0.5) (0.2) 0.3 Foreign exchange gains and losses Ordinary income Changes

21. Slide 21: Decline in total assets

    35.5 billion yen decline in total assets ＜Comparison with End of FY2016> (billions of yen) Cash and cash Total assets equivalents Total assets Trade receivables Current assets 96.8 64.3 74.8 71.2 68.4 Current →Impact of seasonal factors, assets bank holidays, etc. 41.2 37.9 40.7 41.1 40.6 Inventory

22. Slide 22: Changes in liabilities and net assets

    Total liabilities down by 28.7 billion yen, total net assets down by 6.7 billion yen ＜Comparison with End of FY2016> （billions of yen） Total Accounts payable Total Short-term bank liabilitites 38.5 34.6 37.8 38.8 Current 35.8 liabilities 73.4 Current Deposits received 66.2 101.4 94.8 8.2 79.0 liabil

23. Slide 23: Cash basis investment totaled 5.9 billion yen

    Cash basis investment totaled 5.9 billion yen (billions of yen) <Trend in investment> 45.0 ①<Capital expenditure; lease fees> about ¥ billion yen in consolidated total Cash flow from investment （tangibles, intangibles, lease fees, etc.) 40.0 activities <Major items> 35.0 billion yen planned in - “Li

24. Slide 24: Strengthening of Platform Functions

    Embarked on “Strengthening of Platform Functions” stipulated in Medium-Term Management Plan Establishment of Delicious Taste Technology Research Center R&D -Established under Group R&D headquarters (Kohoku-ku, Yokohama) -Strengthened food processing technology, material technology development, delic

25. Slide 25: R&D successes to product development

    R&D successes to product development  Feb 27: Confirmed moisture retention improvement function of “SBL88 lactic acid bacteria” 〜 delightful function of Sapporo’s lactic acid bacteria 〜  Mar 21: Determined the calcium absorption promotion properties of citric acid from small Transformation intesti

26. Slide 26: Environmental protection and work style improvement

    Personnel, human resources Communications Environmental protection initiatives and promotion of work style improvement  Jan 10: Provided production technology for commercialization of the world’s first (Sapporo study) bio-ethanol plant that uses cassava pulp and concluded consulting contract for pl

27. Slide 27: Appendix

    Appendix Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 27/40

28. Slide 28: Major sales & sales volume

    Major sales & sales volume Appendix Copyright, 2017 SAPPORO HOLDINGS LTD. All rights reserved. 28/40

29. Slide 29: Japanese Alcoholic Beverages sales volume

    【Beer】 （sales volume） ＜Y-o-y change in sales volume of 3 core brands> Jan-Mar up ％ y-o-y （total demand down 1％） 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 【Happoshu+new genre】 （sales volume） 95 Appendix Jan Feb Mar 

30. Slide 30: Beer category sales volume

    (10,000 cases) ＜Beer and beer-type beverages category Jan- Mar sales volume Y-o-y Change (Shipment base) 1,400 1,200 1,000 800 600 400 ＜Beer lineup (Jan – Mar breakdown＞ 200 12% Appendix 0 2011 2012 2013 2014 2015 2016 2017 Japanese Alcoholic Beer, happoshu, new genre Beer Happoshu, new genre Bevera

31. Slide 31: Japanese Alcoholic Beverages net sales

    4.0 (billions of yen) ＜Jan- Mar Net Sales＞ (billions of yen) 3.0 ※incl. liquor tax 60 2.0 1.7 1.6 1.6 1.7 1.2 1.4 1.5 50 1.0 1.0 1.1 1.1 1.4 1.2 1.1 1.1 0.0 40 19.3 2011 2012 2013 2014 2015 2016 2017 14.9 13.8 14.4 13.9 12.7 14.8 30 Japanese wine Imported wine 1.5 20 1.0 27.2 28.1 28.2 29.9 27.8 29.

32. Slide 32: Major new products: alcoholic beverages

    ＜Jan- Mar Major new products＞ YEBISU Hanamiyabi YEBISU Meister YEBISU Kireto Lemon sour Ai no Skal improved Special edition can Collagen 1000 White sour Appendix Japanese Alcoholic Beverages Mugi to Hop The gold Mugi to Hop Platinum Clear Perrito Zuccardi series Classic Harunokaori Special edition c

33. Slide 33: International data

    【SLEEMAN】 【U.S. soft drinks business】  Jan- Mar up ％ y-o-y *sales volume  Jan- Mar up ％ y-o-y *sales revenue （total demand down 2%) ＜Ｕ.S. soft drinks business Net Sales in Local Currency (Jan-Mar)＞ * before elimination of inter- company transactions 【Sapporo U.S.A.】 80 71 66  Jan- Mar up ％ y-o-y

34. Slide 34: Sleeman and Sapporo U.S.A.

    ＜SLEEMAN：Net Sales in Local Currency (Jan- Mar)) Sapporo brand sales volume *before elimination of inter- company transactions 8% 80 breakdown by geographic area 70 37% 6% 1.46 60 50 13% million 0.79 40 cases 69 71 75 million 30 63 65 64 48 52 54 cases 55% 20 43 2012 2017 10 1Q 81% 1Q North America

35. Slide 35: Food & Soft Drinks sales composition

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

36. Slide 36: Food & Soft Drinks net sales

    ＜Food & Soft Drinks segment Net sales> ＜Food & Soft Drinks segment (Jan- Mar) Net sales break down by geographic area＞ 35.0 ※April 2011 Consolidation of 30.0 POKKA CORPORATION 25.0 83% 20.0 31.5 15.0 28.1 27.6 29.8 29.3 30.2 10.0 17% 5.0 10.4 7.9 6.5 6.1 6.6 Appendix 0.0 2007 2008 2009 2010 2011 201

37. Slide 37: Pokka Create outlets

    【Pokka Create CO., Ltd.】  Jan- Mar Net sales billion up ％ y-o-y ＜New & refurbish outlets ＞ <Number of outlets as of Mar 31 , 2017 : 193> 106 Appendix 49 East Japan Food & Soft Drinks 193 Central Japan West Japan 38 110 Directory operated 83 193 FC Copyright, 2017 SAPPORO HOLDINGS LTD. All rights re

38. Slide 38: Major new products: food and soft drinks

    ＜Jan- Mar Major new products＞ Ribbon Series Nippon Oolong Tokyo Ryokucha Hita no nashi Canned Jikkuri kotokoto soup series improved improved Appendix Food & Soft Drinks Plus Nyusankin Tonyu Inryo series L: Kireto Lemon – C water World Lemonade Lemon no Setouchi Lemon R: Kireto Lemon- C Supply Pakuch

39. Slide 39: Restaurants net sales and outlets

    (billions of yen) Trends of net sales and number of ＜Sapporo Lion outlets ＞ Sapporo Lion Outlets As of March 31, 2017 8.0 200 194 192 190 7.0 186 188 180 6.0 179 174 9 8 170 170 5.0 160 14 Tokyo Metropolis 4.0 150 6 Kanto (excl. Tokyo) 3.0 140 Hokkaido 5.4 5.5 5.4 5.4 5.4 5.5 4.8 130 2.0 120 174 Toh

40. Slide 40: New and refurbished restaurants

    YEBISU BAR opens in the Chugoku-Shikoku area and Singapore Tonkichi Yokohama for the first time opens after renovation Appendix  YEBISU BAR at Hiroshima  Renovated Isetan Scotts and Takashimaya Opened on February 10, 2017 restaurants Offers dishes made with produce from Hiroshima  Orchard Central

41. Slide 41: Major rental properties and occupancy rates

    ＜Major rental properties & occupancy rates：（Averages for 2017 1Q ) ＜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 99 ground, 5 below 300.0 12 floors abov

42. Slide 42: Tokyo Energy Service wins special award at Co-gen Awards

    Tokyo Energy Service Co., Ltd. wins special award at the 2016 Co-gen Awards  The company has been pursuing extended use of energy through energy-saving district cooling and heating business from 1994, when we opened Yebisu Garden Place.  Upgraded the existing cogeneration system from gas turbine t

43. Slide 43: Forward-looking statements

    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

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