Sapporo : 1Q Financial Results Presentation Material(1.8MB)

Sapporo Group Business Results Presentation

for the Three Months Ended March 31, 2024

*In this document, the name abbreviations are used:

SH: Sapporo Holdings Limited SB: Sapporo Breweries Ltd. SLN: Sapporo Lion Limited.

PS: Pokka Sapporo Food & Beverage Ltd. SRE: Sapporo Real Estate Co., Ltd.

SPB：SAPPORO PREMIUM BEER

YGP：Yebisu Garden Place

May 14th 2024

URL https://www.sapporoholdings.jp/en/

Copyright, 2024 SAPPORO HOLDINGS LTD. All rights reserved. 1/26

１． Business Results

2． Appendix

・・・P3~P13

・・・P14~P26

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Summary

Business results:While there was an increase in revenue and a decrease in profit, things are progressing according to forecasts

2023 Q1

2024 Q1 YoY changes YoY changes

（billions of yen）

	Result	Result	(amount)	(%)
Revenue	108.8	112.8	4.0	3.7%
Core operating profit	(2.9)	(3.8)	(0.9)	ー
(Revenue - Cost of sales - SG&A expenses)
Operating profit	(3.3)	(1.9)	1.3	ー
Profit before tax	(3.8)	(1.5)	2.3	ー
Profit attributable to owners of parent	(3.6)	(2.0)	1.6	ー

The strategy and action plan outlined in the medium-term management plan will lead to results such as a Q1 return to profitability in the Japan alcoholic beverages business.

• Revenue increased due to strong sales of beer in the Japan alcoholic beverages business and SPB in the overseas alcoholic beverages business.
• Core operating profit declined due to up-front investments, but operating profit increased due to the sale of land and other factors.

While steady progress was made to strengthen beer products, grow SPB, and make structural reforms, improving profitability in the US is a crucial challenge to overcome

Main topics

• Focus brands performed strongly both in Japan and overseas with the Black Label brand at +16% and overseas Sapporo brand at +14% (in terms of sales volume).
• Yebisu Brewery Tokyo opened on April 3.
• Production began at Stone's two breweries located on the West and East coasts (production at the Escondido plant began from March of this year)
• Operations were halted at the SB Nasu plant, and structural reforms were steadily implemented such as the transfer of assets of the Gunma No. 2 plant which
  produces PS plant-based yoghurt.
• We obtained SBT certification for our greenhouse gas reduction targets and received the first certification in Japan for our FLAG-related emissions targets.

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Financial Highlights

（billions of yen）	2023 Q1		2024 Q1		YoY changes	YoY changes
Result		Result		(amount)	(%)
Revenue	108.8		112.8		4.0	3.7%
Revenue（Excluding liquor tax）	85.2		88.6		3.4	4.0%
Overseas revenue	25.9		28.5		2.6	10.2%
EBITDA	2.0		1.3		(0.7)	(35.9%)
(Revenue - Cost of sales - SG&A expenses)	(2.9)		(3.8)		(0.9)	ー
Core operating profit
Core operating profit margin	(2.7%)		(3.4%)		ー	ー
Other operating income (expense)	(0.3)		1.9		2.2	ー
Operating profit	(3.3)		(1.9)		1.3	ー
Profit attributable to owners of parent	(3.6)		(2.0)		1.6	ー

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Financial Highlights

	2023 Q1		2024 Q1		YoY	YoY
（billions of yen）			changes	changes
Result		Result
			(amount)	(%)
Revenue by Segment	108.8		112.8		4.0	3.7%
Alcoholic Beverages	76.6		80.6		4.1	5.3%
Japanese	54.0		55.7		1.7	3.1%
Overseas	18.3		20.3		2.0	11.1%
Restaurants	4.3		4.6		0.4	8.3%
Food & Soft Drinks	26.8		26.6		(0.2)	(0.9%)
Japanese	20.2		19.7		(0.5)	(2.5%)
Overseas	6.6		6.8		0.3	3.9%
Real Estate	5.3		5.5		0.2	3.2%
Other	0.0		0.0		0.0	11.9%

	2023 Q1	2024 Q1	YoY		YoY
（billions of yen）	changes	changes
Result	Result
	(amount)		(%)
Core Operating Profit	(2.9)	(3.8)	(0.9)		-
by Segment
Alcoholic Beverages	(0.5)	(0.2)	0.3		-
Japanese	(0.2)	0.6	0.8		-
Overseas	(0.4)	(1.0)	(0.5)		-
Restaurants	0.1	0.2	0.1		62.6%
Food & Soft Drinks	(0.3)	(0.6)	(0.2)		-
Japanese	(0.7)	(0.7)	(0.0)		-
Overseas	0.4	0.2	(0.2)	(59.0%)
Real Estate	(0.0)	(0.2)	(0.2)		-
Other・ General	(2.1)	(2.8)	(0.7)
corporate and		-
intercompany eliminations					5/26
	Copyright, 2024	SAPPORO HOLDINGS LTD. All rights reserved.

Financial Highlights

Revenue increased for all our businesses, excluding the Japan Food & Soft Drinks business where structural reforms

are being implemented.

The strong performance of beer in the Japan alcoholic beverages business and strong performance of SPB for overseas alcoholic beverages (including the impact of exchange rates) were the drivers of the increase in revenue.

Reasons for changes in sales revenue

(billions of yen)

Japanese

= Increase

= Decrease

Increase beer

sales volume

+12%

2023

Q1

Decrease in happoshu

(include New Genre)

sales volume by (18%)

alcohol tax

Revision(0.8)

Alcoholic Beverages

Overseas

Export+0.4

SPB sales volume

+14%

Overseas brand

sales volume (6%)

Food & Soft Drinks

Real Estate

Japanese

exchange

rate

2024

Q1

Impact of structural

reforms such as

reducing SKUs and

vending machines

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Financial Highlights

While there were factors driving an increase in revenue, we ended with a decrease in profit due to up-front investments including marketing investment, investment in human capital, and IT infrastructure investment.

Progressing as anticipated in relation to targets

Reasons for changes in core operating profit

Japanese

2023

Q1

Product mix,

Price revision,etc.

(billions of yen)

= Increase	Sales promotion
	investment(0.4)
	Fixed costs,
= Decrease	etc.(0.6)

Details of the factors behind the changes

Alcoholic BeveragesFood & Soft Drinks Real Estate are shown on the business strategy page

from p. 9 onward

Japanese

2024

Q1

Sales promotion

investment(0.2)

IT infrastructure investment, etc.

Domestic _ investment in human capital (0.7)

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Business Strategies：Action Plan

Plan to steadily disclose details of action plan

Japan alcoholic beverages

Overseas alcoholic beverages

Restaurants

Japan Food &

Soft Drinks

Overseas Soft

Drinks

Real Estate

Entire Group

			On slides after page 9, we have included further explanations for action plan numbers (1-1) through (10)
	2023		2024	2025 to 2026
Increase beer sales(1-1)	★ Alcohol tax revisions		★ Alcohol tax revisions
Increase RTD sales(1-2)
Reorganize RTD production locations(2)	Completed

Generate synergies through function integration(3-1)

Begin producing SPB (keg draft) in the U.S.(3-2)

Optimize global production and logistics(3-3)

Reduce unprofitable restaurants(4-1)

Completed

Strengthen existing stores (improve customer experience value) and shift focus to new formats(4-2)

Fundamental structural reforms(5)

Increase sales in countries with room for growth(6)

Changed to no longer included in KPIs as the change in strategy

Build an asset turnover business model(7)

had a negligible impact on business performance.

Increase value of core properties centered on YGP(8)

Fundamentally reshuffle business portfolio(9)

Fundamentally reshuffle by 2024 and review the business portfolio annually thereafter

Generate Group synergies around brand and connections with customers and communities(10)

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Business Strategies：Alcoholic Beverages

Japanese

Revenue：55.7billions of yen（YoY+1.7billions of yen、＋3.1%）

Reasons for changes in core operating profit(billions of yen）	Investment in
	human capital(0.3)
	repair costs(0.3)

Core operating profit：0.6billions of yen（YoY+0.8billions of yen）

	Beer-type	wine, spirits,
Beer-type beverages	beverages'	Sales promotion
non-alcoholic
increase in volume	RTD	Fixed costs, etc.
Marginal profit	beverages, etc	investment
	improvement

Our strategy centered on strengthening beer has been successful, and profitability has steadily improved, with core operating profit in the black for the first quarter.

Increase beer sales (1-1)

We had steady growth, mainly for Black Label, and outperformed the market.

Increase RTD sales (1-2)

RTD saw only a slight increase due to the reaction of releasing new products last year.

YoY

％	YoY
	YoY
	％
		％

Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024

Beer-type beverages	Beer		Canned beer
Total demand	Total demand	Total demand
(estimated by SH): (2%)	(estimated by SH): +9%	(estimated by SH): +13%
✓ share of beer sales	％		Increase on share of high-margin beers
✓ selling price excluding									Improvement of the product
alcohol tax	VS2022							％ mix/Improvement due to price revisions

✓ Total for RTD (cans)	％ VS2022 (Sales amount basis）	YoY+ %
Reference information）+	% y-o-y	(sales volume basis)

Koime no Lemon sour

It continues to perform strongly in its fourth year since release.

2021 Q1

2022 Q1

2023 Q1

2024 Q1

Initiatives for cost-related structural reforms

Reorganize production locations

Expansion of customer contact points and promotion of the creation of enthusiastic fans

We decided to stop operation of the Nasu plant at the end of March 2025 in order to

THE PERFECT Black Label	YEBISU BREWERY TOKYO	establish an optimal manufacturing structure and concentrate management resources.
EXPERIENCE 2024
（Opened on April 3）
（Being implemented in 11 places		9/26
throughout the country from March）		Copyright, 2024 SAPPORO HOLDINGS LTD. All rights reserved.

Business Strategies：Alcoholic Beverages
Overseas	Reasons for changes in core operating profit(billions of yen）
	Decrease in quantity
Revenue：20.3billions of yen（YoY+2.0billions of yen、＋11.1%）	and worsening of the
product mix.	Resolution to dissolve
		Anchor+0.3

Core operating profit：(1.0)billions of yen（YoY(0.5)billions of yen）

Canada

The U.S.

Vietnam

There was a decline in profit due to deteriorating market conditions in Canada and higher fixed costs due to the phased transfer of production in the US, despite the continued

strong performance of SPB.

Market overview

The beer market has been soft since last summer due to inflation.

A shift to value products is also being seen.

The craft beer market has been soft due to inflation.

The beer market outperformed last year due to demand from Vietnamese New Year, but is being impacted by inflation and regulations pertaining to alcohol consumption.

Growth of the Sapporo brand

Continuous growth of the Sapporo brand volume

• Sapporo sales volume +% YoY

Began partnership with Carlsberg.

Sales in Singapore and Hong Kong.

Production and sales in Malaysia began from January 1. Steady progress exceeding our targets and that of last year.

Status of synergies with Stone (3-1~3)

Production began at Stone's two breweries located on

the West and East coasts

Began production at the Richmond plant in December 2023 and the Escondido plant in Q1 of 2024.

We plan to complete the transfer of SPB production to the U.S. by the end of the year

Improving profitability in the US is a crucial challenge.

Restaurants	Sales results for existing SLN stores (YoY)
	（YoY）	Jan.	Feb.	Mar.
Revenue：4.6billions of yen（YoY+0.4billions of yen、＋8.3%）	revenue	119%	118%	110%
	number of customer	113%	112%	105%
Core operating profit：0.2billions of yen（YoY+0.1billions of yen、＋62.6% ）	105%	105%	105%
	sales per customer

The number of customers and average customer spend has been increasing at existing stores leading to continued

profitability, so implement appropriate human capital investment such as across-the-board pay increases.

There is currently a larger downward trend than expected in the craft beer market, and improving profitability is a crucial challenge.

Efforts for improving profitability

• We will steadily progress the transfer of production and generate synergies
• Efforts to strengthen the Sapporo brand's US chain
• Stone brand: Focused investment in core brands

Strengthen existing stores (improve

customer experience value) and shift focus

to new formats(4-2)

The number of stores remains flat, but the number of customers and

average customer spend at existing stores is increasing.

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