Oenon : Consolidated Financial Results for the Six Months Ended June 30, 2022

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

August 5, 2022

	Consolidated Financial Results
	for the Six Months Ended June 30, 2022
	(Under Japanese GAAP)
Company name:	Oenon Holdings, Inc.
Listing:	Tokyo Stock Exchange
Securities code:	2533
URL:	https://www.oenon.jp/english/
Representative:	Yuji Nishinaga, President & CEO
Inquiries:	Naoko Tanaka, General Manager of Corporate Communication Dept.
Telephone:	[phone]

Scheduled date to file quarterly securities report:	August 5, 2022
Scheduled date to commence dividend payments:	－
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:	Yes (for institutional investors and securities
	analysts)

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the six months ended June 30, 2022 (from January 1, 2022 to June 30, 2022)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year changes.)
		Net sales		Operating income	Ordinary income		Profit attributable to
				owners of the parent
	Six months ended	Millions of yen		%	Millions of yen	%	Millions of yen		%	Millions of yen	%
	June 30, 2022	38,368		1.0	(147)	－	(77)		－	(744)	－
	June 30, 2021	37,981		0.5	825	1.5	867		5.8	558	66.5

Note: Comprehensive income	For the six months ended June 30, 2022:	¥(607) million	[－%]
			For the six months ended June 30, 2021:	¥669 million	[168.2%]
		Basic earnings	Diluted earnings
			per share	per share
	Six months ended		Yen	Yen
	June 30, 2022		(12.53)	－
	June 30, 2021		9.40	－

(2) Consolidated financial position

	Total assets	Net assets	Equity-to-asset ratio
As of	Millions of yen	Millions of yen	%
June 30, 2022	50,269	21,000	37.9
December 31, 2021	52,280	22,045	38.3

Reference: Equity
As of June 30, 2022:	¥19,049 million
As of December 31, 2021:	¥20,013 million

2. Cash dividends

			Annual dividends per share
	First quarter-end		Second quarter-end	Third quarter-end		Fiscal year-end	Total
	Yen		Yen	Yen		Yen	Yen
Fiscal year ended	－		－	－		7.00	7.00
December 31, 2021
Fiscal year ending	－		－
December 31, 2022
Fiscal year ending
December 31, 2022				－		5.00	5.00
(Forecast)

Note: Revisions to the forecast of cash dividends most recently announced: Yes

We have revised our dividend forecast for the fiscal year ending December 31, 2022 from ¥7 to ¥5. For details, please refer to today's release, entitled "Notice of the Revision to Dividend Forecast." (Japanese only)

3. Financial Forecast for the Year Ending December 31, 2022

(from January 1, 2022 to December 31, 2022)			(Percentages indicate year-on-year changes.)
	Net sales		Operating income	Ordinary income	Profit attributable to	Basic earnings
		owners of the parent	per share
Year ending	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
December 31, 2022	81,500		3.7	(850)	－	(800)	－	(1,600)	－	(26.92)

Note: Revisions to the financial forecast for this period: Yes

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and restatement
4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury shares)

As of June 30, 2022	65,586,196 shares
As of December 31, 2021	65,586,196 shares

(ii) Number of treasury shares at the end of the period

As of June 30, 2022	6,153,604 shares
As of December 31, 2021	6,153,362 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Six months ended June 30, 2022	59,432,743 shares
Six months ended June 30, 2021	59,433,504 shares

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters
  The forecasts and future projections contained herein have been prepared on the basis of forecasts as of the date

of announcement of this document. The assumptions and forecasts that form the basis of the plan are included in the stated information. Actual performance may differ substantially from forecasts for a variety of reasons.

Please refer to "(3) Explanation of Consolidated financial forecast and other forward-looking information" within "1. Qualitative information on quarterly financial results" on page 4 of the attachment to this document for cautionary statements concerning the conditions and performance forecasts that serve as the basis for these forecasts.

Content of Supplementary Materials

1. Qualitative information on quarterly financial results	2
(1)	Operating performance analysis	2
(2) Financial conditions analysis	3
(3)	Explanation of Consolidated financial forecast and other forward-looking information	4
2. Quarterly consolidated financial statements and notes	5
(1)	Quarterly consolidated statement of financial position	5
(2)	Quarterly consolidated statement of income and
	quarterly consolidated statements of comprehensive income	7
(3) Quarterly consolidated statement of cash flows	9
(4)	Notes to the quarterly consolidated financial statements	10
	(Notes related to the going concern assumption)	10
	(Notes in the event of significant changes in shareholders' equity)	10
	(Changes in accounting methods)	10
	(Segment information, etc.)	11

First Half of the Fiscal Year Ending December 31, 2022 Financial Summary

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1. Qualitative information on quarterly financial results

(1) Operating performance analysis

During the six months ended June 30, 2022, economic and social activity began to resume in Japan, as the population began adapting to life in the presence of COVID-19. On the other hand, the economic outlook remains uncertain due to rapid fluctuations in exchange rates, such as sudden depreciation of the yen, as well as the escalation of tensions in the Ukraine and further increases in ingredient prices.

In this operating environment, the Oenon Group continued to implement various measures based on the five pillars of its medium- to long-term management strategy, Long-Term Vision 100, to achieve sustainable growth of the Group and enhance its corporate value over the medium to long term.

As a result, in the six months ended June 30, 2022 net sales amounted to ¥38,368 million (up 1.0% year on year). On the profit front, the Group recorded an operating loss of ¥147 million (operating income of ¥825 million in the same period of the preceding year) and an ordinary loss of ¥77 million (ordinary income of ¥867 million), due to sharply higher prices of ingredients: crude alcohol and corn. The loss attributable to owners of the parent was ¥744 million (profit attributable to owners of the parent of ¥558 million).

Segment performance is shown below.

Sales results

			Six months ended	YoY change
			June 30, 2022
Segment name		Item	(Previous period
	(January 1 to June 30, 2022)
			= 100%)
			(Millions of yen)
Alcoholic beverages	Japanese	Shochu	17,413	94.1
	alcohol
Chu-hi(RTD)	6,537	113.0
	products
Sake	1,627	105.0
		Sake compounds	831	98.1
		Brewing and industrial	5,025	108.6
		alcohol for sale
		Mirin (sweet sake for	290	86.1
		cooking)
			31,726	100.2
	Wine and spirits	2,219	106.7
	Others		283	103.0
			34,229	100.6
Starch for food processing		2,053	110.2
Enzymes and pharmaceuticals		1,857	98.2
Real estate		190	111.3
Others		37	108.0
Total		38,368	101.0

(Alcoholic beverages)

In the alcoholic beverages segment, the market is struggling to expand and price competition is growing more intense, as the Japanese population is shrinking, the birth rate is falling, the population is aging, and the frequency of drinking outside the home is declining. The practice of drinking at home is becoming more entrenched, prompting an expansion of the market for chu-hi and other RTD products. We also experienced rapid growth in the market for ready-to-serve (RTS) products. These products, referred to as chu-hi base spirit, are easy to prepare and let consumers enjoy bar-like flavors from the comfort of their homes. As a result, sales of alcoholic beverages amounted to ¥34,229 million (up 0.6% year on year). In this segment, the operating loss was ¥446 million (operating income of ¥296 million in the same period of the previous year).

In the shochu category (within Japanese alcohol products), performance was favorable from Hakata no Hana, our otsu-typeshochu series and shiso shochu, Tantakatan, but lower sales of store-brand products sapped category sales. In this category, we ran a Twitter-only photo submission campaign for our shiso shochu, Tantakatan, named "Search

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