3Q Financial Results - Consolidated (Based on IFRS)(508.8KB)

Financial Results

for the nine months ended September 30, 2021 - Consolidated (Based on IFRS)

November 5, 2021

Company name	Sapporo Holdings Limited
Security code	2501
Listed on	Tokyo Stock Exchange (First Section); Sapporo Securities Exchange
URL	https://www.sapporoholdings.jp/en/
Representative	Masaki Oga, President and Representative Director
Contact	Tatsuya Komatsu, Director of the Corporate Planning Department
Telephone	[phone]

Scheduled dates:
Filing of quarterly financial report	November 12, 2021
Commencement of dividend payments	-
Supplementary information to the quarterly earnings results	Available
Quarterly earnings results briefing held	Yes
	(mainly targeted at institutional
	investors and analysts)

1. Consolidated Financial Results for the nine months ended September 30, 2021 (January 1 - September 30, 2021)

(Amounts in million yen rounded to the nearest million yen)

(1) Operating Results

(Percentage figures represent year-over-year changes)

		Revenue		Core operating			Operating profit			Profit
						profit
		million yen	%	million yen	%		million yen	%		million yen		%
	Nine months ended	309,061	(2.0)	1,544	31.7			23,948		_		15,661		_
	September 30, 2021
	Nine months ended	315,346	(12.7)	1,173	(81.7)		(2,041)		_		(1,162)		_
	September 30, 2020
		Profit attributable to		Total comprehensive		Basic earnings		Diluted earnings
		owners of parent			income					per share		per share
		million yen		%		million yen		%				Yen		yen
	Nine months ended	15,731		_		21,617				_		201.95			197.72
	September 30, 2021
	Nine months ended	(925)		_		(8,084)				_		(11.87)			(11.87)
	September 30, 2020
Note: Profit before tax

Nine months ended September 30, 2021:23,883 million yen

Nine months ended September 30, 2020: (2,850) million yen

Note: Core Operating Profit is a proprietary profit indicator that measures the performance consistency of our business. Core operating profit is calculated as Revenue - Cost of sales - SG&A expenses.

－ 1 －

(2) Financial Position

	Total assets	Total equity	Equity attributable	Equity ratio
			to owners of	attributable to
			parent	owners of parent
	million yen	million yen	million yen	%
Nine months ended	576,843	167,818	167,099	29.0
September 30, 2021
December 31, 2020	616,349	149,551	149,781	24.3

2. Dividends

					Dividend per share
Record date or period	End Q1		End Q2		End Q3	Year-end	Full year
	Yen		yen		Yen	yen	yen
Year ended December	-	0.00		-	42.00	42.00
31, 2020
Year ending December	-	0.00		-
31, 2021
Year ending December								42.00	42.00

31, 2021 (forecast)

Note: Changes were made to dividends forecasts in the nine months ended September 30, 2021: None

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2021 (January 1 - December 31, 2021)

(Percentage figures represent year-over-year changes)

	Revenue	Core operating	Operating		Profit		Profit attribute to	Basic earnings
			profit		profit				owners of parent	per share
	million yen	%	million yen		%	million yen		%	million yen	%	million yen	%	Yen
Year ending	447,200	2.9	6,700		57.2	18,000		_	12,000	_	12,000	_	154.05
December
31, 2021

Note: Changes were made to earnings forecasts in the nine months ended September 30, 2021: None

－ 2 －

4. Other

(1) Changes to scope of consolidation: None

*Changes affecting the status of significant subsidiaries (scope of consolidation)

Newly consolidated: -

Newly excluded: -

1. Changes in accounting policy, changes in accounting estimates, and retrospective restatement
2. 1. Changes in accounting policies required by IFRS: None
   2. Changes other than 1) above: None
   3. Changes in accounting estimates: None
3. Number of shares issued and outstanding (common stock)
4. 1. Number of shares issued at end of period (treasury stock included): September 30, 2021: 78,794,298 shares
      December 31, 2020: 78,794,298 shares
   2. Number of shares held in treasury at end of period: September 30, 2021: 896,091 shares December 31, 2020: 896,951 shares
   3. Average number of outstanding share during the period:

Nine months ended September 30, 2021: 77,898,123 shares

Nine months ended September 30, 2020: 77,897,518 shares

*Quarterly review status

The quarterly financial results are not subject to quarterly reviews pursuant to the Financial Instruments and Exchange Act.

Appropriate Use of Earnings Forecasts and Other Important Information

This document contains projections and other forward-looking statements based on information available to the Company as of the date of this document. Actual results may differ from those expressed or implied by forward-looking statements due to various factors. For the assumptions underlying the forecasts herein and other information on the use of earnings forecasts, refer to "1. Analysis of Operating Results and Financial Condition (4) Consolidated Earnings Forecast" on page 7.

－ 3 －

1. Analysis of Operating Results and Financial Condition

(1) Operating Results

In the first nine months of 2021 (January 1 to September 30, 2021), the Group was impacted by Japan's repeated issuances of state of emergency due to the COVID-19 pandemic and restrictions on the service of alcoholic beverages due to semi-state of emergency measures, which caused sales of commercial-use beer and sales to restaurants such as beer halls to decline compared to the same period of the previous year.

However, the core operating profit increased year on year due to a curtailment in expenses from cost structure reforms. Additionally, operating profit and net profit attributable to owners of parent were up year on year due to the sale of investment properties.

1) Summary in key figures

Millions of yen, except percentages

	Revenue	Core operating profit	Operating profit	Profit attributable to
				owners of parent
Nine months ended September	309,061	1,544	23,948	15,731
30, 2021
Nine months ended September	315,346	1,173	(2,041)	(925)
30, 2020
Change (%)	(2.0)	31.7	―	―

*Core operating profit is the Sapporo Group's unique profit benchmark for measuring the performance of its regular business and is calculated by deducting cost of sales, and selling, general and administrative expenses, from revenue.

Results by segment are outlined below.

2) Results by reportable segment

Millions of yen, except percentages

		Revenue		Core operating profit	Operating profit
	Nine months		Nine months		Nine months	Nine months		Nine months	Nine months
	ended		ended	Change	ended	ended	Change	ended	ended	Change
	September.		September.	(%)	September.	September.	(%)	September.	September.	(%)
	30, 2020		30, 2021		30, 2020	30, 2021		30, 2020	30, 2021
Alcoholic	206,797		202,029	(2.3)	317	45	(85.9)	(3,655)	(182)	―
Beverages
Food &	90,966		90,399	(0.6)	(2,346)	(257)	―	(2,469)	(13)	―
Soft Drinks
Real Estate	17,459		16,510	(5.4)	8,003	6,398	(20.0)	8,609	28,555	231.7

Alcoholic Beverages

Japan

The commercial-use market in the country has been significantly impacted by the COVID-19 pandemic. Total demand in Japan for beer and beer-type beverages is estimated to have only reached around 91% of the year-earlier level.

Amidst this situation, in the beer category, commercial-use beer sales volume declined, but sales of canned Sapporo Draft Beer Black Label and Yebisu brand beers were strong, with sales volumes at 114% and 104% of the previous year's level, respectively. In the new genre category, Sapporo Gold Star, which won three awards in Japan and overseas, continued its success, with an increase of 5% year on year in sales volume. As a result, total sales of beer and beer-type beverages stood at 91% of the year-earlier level.

In addition, we launched a low-alcohol,beer-like drink The DRAFTY in September 2021, taking on the challenge of creating new markets.

－ 4 －

In the RTD*1 category, sales of Sapporo Koime no Lemon Sour, a new product launched in March 2021, were strong, while sales of core collaborative RTD product Otoko Ume Sour were also steady, driving category revenue significantly higher year on year.

Our Japanese liquor business also posted a year-on-year increase in revenue with sustained solid sales of Kokuimo brand, Japan's best-selling*2 blended imo shochu, as well as Koime no Lemon Sour no Moto.

Overseas

The overseas commercial-use market has been impacted by the COVID-19 pandemic. Total demand in North America for beer and beer-type beverages is estimated to have increased year on year, as it is on a recovery trend in the United States, while it decreased year on year in Canada.

Under this trend, although overseas brands saw a decrease year on year in beer sales volume in the course of strategic product changes by Sleeman Breweries, our focus RTD sales volume increased year on year.

Sales volume of Sapporo brand beer were up year on year, since the commercial-use market recovered thanks to removed operating restrictions placed on restaurants in the United States, in addition to the success of strengthening efforts in the home-use market.

Restaurants

The entire restaurant industry, including pub restaurants and izakaya, has been suffering substantial impacts from the COVID-19 pandemic since 2020. In the Company's restaurant business, many restaurants were closed or had shortened operating hours during the period of restricted sales of alcoholic beverages.

Amidst these challenges, the business experienced a decrease in revenue yet an improvement in core operating loss year on year, after efforts to bolster menus along with take-out and delivery products, close unprofitable restaurants, and shift to a low-cost,low-operation business format, among other initiatives.

As a result of the above factors, revenue in the Alcoholic Beverages segment for the first nine months of 2021 came to ¥202.0 billion (down ¥4.8 billion or 2% year on year). The segment posted a core operating profit of ¥0.0 billion (down ¥0.3 billion or 86% year on year) and an operating loss of ¥0.2 billion (compared with a loss of ¥3.7 billion a year earlier).

*1: RTD, or ready-to-drink beverages, are pre-mixed,low-alcoholcocktail-like beverages that can be consumed as is immediately after opening.

*2: Based on Intage SRI market research on combined blended imo shochu sales in the supermarket, convenience store, and direct sales channels from December 2019 to September 2021.

Food & Soft Drinks

Although total demand in Japan for soft drinks continued to expand due to the lesser impact of the COVID-19 pandemic compared to the previous year and the hot weather that lasted until the early August, growth is estimated to have remained flat year on year because of the decrease after the torrential rains mainly in western Japan in the mid-August.

Against this backdrop, in the domestic soft drink business, sales of lemon-based soft drinks such as Kireto Lemon were strong on rising health consciousness, and posted a solid increase of 14% year on year.

The Craft Cola, which we revamped in September, also helped to attract attention, and the total sales volume for soft drinks was on a par year on year.

In the domestic food business, the sales volume of cold canned soups soared by 29% year on year. Lemon-based food products grew in sales volume by 6% year on year, as Pokka Lemon continued

to perform well due to the expansion in household demand.

Plant-based milk products also saw a 6% year-on-year increase in its sales volume, with our soymilk yogurt products contributing to this increase thanks to rising health consciousness. In addition, we launched GreenBio Almond Milk Yogurt (plain, unsweetened) in September to further revitalize the

－ 5 －