Sapporo : 1Q Financial Results - Consolidated (Based on IFRS)(398.8KB)

Financial Results

for the three months ended March 31, 2023 - Consolidated (Based on IFRS)

May 11, 2023

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	Yosuke Nakamura, Director of the Corporate Planning Department
Telephone	[phone]

Scheduled dates:
Filing of quarterly financial report	May 12, 2023
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 three months ended March 31, 2023 (January 1 - March 31, 2023)

(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

%

Three months ended

108,768

16.6

(2,935)

－

(3,282)

－

(3,589)

－

March 31, 2023

Three months ended

93,246

3.7

(6,400)

－

(4,508)

－

(3,990)

－

March 31, 2022

Profit attributable to

Total comprehensive

Basic earnings

Diluted earnings

owners of parent

income

per share

per share

million yen

%

million yen

%

Yen

Yen

Three months ended

(3,596)

－

(913)

－

(46.16)

(46.16)

March 31, 2023

Three months ended

(3,993)

－

58

－

(51.26)

(51.26)

March 31, 2022

Note: Profit before tax

Three months ended March 31, 2023

3,826) million yen

Three months ended March 31, 2022

(4,302) million yen

(

*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

			Equity	Ratio of
			equity attributable
	Total assets	Total equity	attributable to
	to owners of parent
			owners of parent
			to total assets
	million yen	million yen	million yen	%
Three months ended	620,481	163,011	162,108	26.1
March 31, 2023
Year ended	639,118	167,201	166,310	26.0
December 31, 2022

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, 2022
Year ending December		-
31, 2023
Year ending December			0.00			-	45.00	45.00
31, 2023 (forecast)
Note: Changes to the latest dividend forecast announced: None

3. Forecast of Consolidated Earnings for the Year Ending December 31, 2023 (January 1 - December 31, 2023)

(Percentage figures represent year-over-year changes)

Profit

Basic

attributable

Core

Operating

earnings

Revenue

Profit

to

operating profit

profit

per

owners of

share

parent

million yen

%

million yen

%

million

%

million

%

million

%

yen

yen

yen

yen

Year

ending

490,000

2.4

13,500

45.0

9,500

(6.0)

5,570

1.0

5,500

0.9

70.61

December

Note: Changes to the latest consolidated results forecast announced: None

*Earnings forecasts for the six months ending June 30, 2023 are omitted because the company manages performance targets on a yearly basis.

－ 2 －

4. Other

1. Changes to scope of consolidation: None
2. Changes in accounting policy, changes in accounting estimates, and retrospective restatement
3. 1. Changes in accounting policies required by IFRS: None
   2. Changes other than 1) above: None
   3. Changes in accounting estimates: None
4. Number of shares issued and outstanding (common stock)

1. Number of shares issued at end of period (treasury stock included): March 31, 2023: 78,794,298 shares
   December 31, 2022: 78,794,298 shares
2. Number of shares held in treasury at end of period:

March 31, 2023: 896,942 shares

December 31, 2022: 896,678 shares

1. Average number of outstanding shares during the period: Three months ended March 31, 2023: 77,897,356 shares Three months ended March 31, 2022: 77,897,589 shares

Audit Status

The quarterly financial results are outside the scope of audit procedures based on 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 8.

Seasonal factors

The Group's operating results are affected by substantial seasonal variation in demand in the Alcoholic Beverages and Food & Soft Drinks businesses. Revenues consequently tend to be lower in the first quarter than in the other three quarters.

－ 3 －

1. Analysis of Operating Results and Financial Condition

(1) Operating Results

In this quarterly consolidated accounting period (January 1 - March 31, 2023), lifestyle patterns of living with COVID- 19 penetrated society and the impacts of the COVID-19 pandemic were also limited in nature. On the other hand, the outlook remains uncertain, with concerns over rising prices due to factors such as the situation in Ukraine, the depreciation of the yen, and inflation from surging prices of raw materials and energy will lead to consumers becoming more cautious with their spending.

Under these circumstances, the Sapporo Group will decisively implement structural reforms, aiming to realize our growth strategy in the first year of our "Medium-Term Management Plan (2023-2026)."

Consolidated revenue overall increased compared to the previous first quarter. This was because of the recovery of on-trade beer sales and dining out demand for beer halls in Alcoholic Beverages, along with the inclusion of STONE BREWING CO., LLC (Stone) as a consolidated subsidiary at the end of August 2022, and the effects of opening Center Plaza in November 2022 in Real Estate, which both counteracted decreased revenue following the transfer of the cafe business in April 2022 and the liquidation of a vending machine operator subsidiary in November 2022 intended to shift management resources of Food & Soft Drinks to growth areas. Furthermore, factors behind increased revenue include the impacts of the reactive increase because of quasi-emergency measures against COVID-19 implemented in the same period of the previous year.

Consolidated core operating profit increased year on year amid the effects of increased revenue in the Alcoholic Beverages business and structural reforms in the Restaurants business.

Summary in key figures

Millions of yen, except percentages

	Revenue	Core operating profit	Operating profit	Profit attributable to
	owners of parent
Three months ended	108,768	(2,935)	(3,282)	(3,596)
March 31, 2023
Three months ended	93,246	(6,400)	(4,508)	(3,993)
March 31, 2022
Change (%)	16.6	－	－	－

*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.

Alcoholic Beverages

Revenue increased year-on-year thanks to price revisions, strong sales in North America, and the addition of Stone Brewing Co., LLC to the Group at the end of August 2022, in addition to the reactive increase from quasi-emergency measures against COVID-19 implemented in the same period of the previous year.

Core operating profit and operating profit both increased year-on-year, despite increased variable costs due to factors such as increased raw material prices. This was thanks to the effects of increased revenue from the recovery in the on-trade market as well as the effects of structural reforms of the Restaurants business.

■Revenue: ¥76.6 billion (up ¥16.0 billion, or 26.5% year on year)

■Core operating profit: ¥(0.5) billion (compared with a loss of ¥3.9 billion a year earlier)

■Operating profit: ¥(0.8) billion (compared with a loss of ¥2.4 billion a year earlier)

Details of Alcoholic Beverages (Japan and Overseas) and Restaurants in the Alcoholic Beverages business were as follows.

Japan

Dining out demand switched to recovery mode following the reactive increase because of quasi-emergency measures against COVID-19 implemented in the same period of the previous year. As a result, total domestic

－ 4 －

demand for beer and beer-type beverages was estimated to have been about 102% year-on-year.

In this fiscal year, we are focusing more on strengthening (*) beer and RTD in anticipation of the liquor tax revision in October 2023.

In this context, the Group's total domestic sales volumes of beer and beer-like beverages was 106% of the previous year's level thanks to an increase of on-trade products. Additionally, sales of canned RTDs remained strong, at 103% of the previous year's level.

Overseas

Economic activities resumed from COVID-19 countermeasures and on-trade market demand was in recovery mode, and while total demand for beer and beer-type beverages in Canada exceeded that of the previous year, in the United States, demand is expected to fall below the previous year's level due to the impacts of record-breaking torrential rainfall and cold snap on the West Coast and other factors.

In this context, sales volume of overseas beer brands exceeded that of the previous year thanks to a recovery of the on-trade market in Canada and after including the sales of Stone in the United States. Additionally, sales volume of Sapporo brand beer in the focus market of North America was strong at 111% of the previous first quarter's level.

Restaurants

Dining out demand switched to recovery mode following the reactive increase because of quasi-emergency measures against COVID-19 which had been implemented in the same period of the previous year.

Amid this, the Sapporo Group's Restaurants business recorded same-store sales at 98.9% of 2019, recovering to roughly the same level as before the outbreak of the COVID-19 pandemic.

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

Food & Soft Drinks

・Revenue declined year-on-year due to the impacts of reduced units in operations following the liquidation of a vending machine operator subsidiary and divestment of the cafe business in April 2022. This was despite price revisions.

・Core operating profit and operating profit both increased compared to the same period of the previous fiscal year, despite increased raw material costs. This was thanks to the contribution of improved profits due to profit structure improvements and price revisions.

■Revenue: ¥26.8 billion (down ¥0.9 billion, or 3.1% year on year)

■Core operating profit: ¥(0.3) billion (compared with a loss of ¥1.0 billion a year earlier)

■Operating profit: ¥(0.3) billion (compared with a loss of ¥0.4 billion a year earlier)

Food & Soft Drinks (Japan)

・Although demand in the on-trade market and vending machines has been impacted by the "life of coping with COVID-19" becoming more prevalent, overall domestic beverage demand is estimated to be around 99% that of the previous year because of the recovery following the easing of pandemic restrictions.

In this context, overall sales volume of soft drinks was 92% of the previous year's level due to the reduction in operating units after the liquidation of a vending machine operator subsidiary, but sales of no-sugar-added tea made with selected domestic ingredients were brisk at 106% year-on-year.

Overseas Beverage

・Domestic revenue in Singapore was 103% year-on-year amid robust sales primarily in the off-trade channel.

In addition, revenue in Malaysia, a focus area, was 114% year-on-year because we made progress with strengthening our sales structure. Export sales mainly to the Middle East were also brisk, at 107% year-on-year.

Real Estate

Revenues increased year-on-year thanks to the effects of the opening of the remodeled Center Plaza at Yebisu － 5 －