Sapporo : 4Q (Teleconference Meeting) Q&A(2.4MB)

Sapporo Holdings Limited

Q4 Financial Results Briefing for the Fiscal Year Ending December 2021

February 14, 2022

Event Summary

[Company Name]	Sapporo Holdings Limited
[Company ID]	2501-QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	Q4 Financial Results Briefing for the Fiscal Year Ending December 2021
[Fiscal Period]	FY2021 Q4
[Date]	February 14, 2022
[Number of Pages]	42
[Time]	10:00 - 11:34
	(Total: 94 minutes, Presentation: 45 minutes, Q&A: 49 minutes)
[Venue]	Dial-in
[Number of Speakers]	3
	Masaki Oga	President and Representative Director
	Yoshihiro Iwata	Managing Director
	Hiroyuki Nose	President and Representative Director,
		Sapporo Breweries Limited

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Presentation

Moderator: Good morning investors. Thank you for participating in today's presentation of Sapporo Holdings Limited's financial results for the fourth quarter of FY2021. The time has arrived, so we will begin now.

Masaki Oga, President and Representative Director of Sapporo Holdings, Yoshihiro Iwata, Managing Director of Sapporo Holdings, and Hiroyuki Nose, President and Representative Director of Sapporo Breweries Limited are present today. Please have the prepared financial statements, supplementary explanatory materials for the financial statements, and PowerPoint presentation of the financial statements at hand.

First, Mr. Oga and then Mr. Iwata will give an overview of the financial results for the fourth quarter, based on the PowerPoint presentation, for about 40 minutes, followed by a question-and-answer session. The entire meeting is scheduled to last approximately one and a half hours. The conference call will now begin. Let me start with a presentation from Oga. Please go ahead.

Oga: Good morning. I am Oga. Now, I would like to give you an overview of our business performance for 2021.

I would like you to open the power point presentation to page 4. First, we look back on last year's restaurant business, including Lion, as the most affected. There were many days when business itself was not possible, and as in 2020, food services struggled the most.

In terms of timing, it's the three months of July, August, and September. In the so-called third quarter, during the summer, we perceive that we were very strongly affected. In this environment, we struggled in some areas, but in the alcoholic beverages business, we were able to expand sales both in Japan and overseas, with sales revenue of JPY437.2 billion, up JPY2.4 billion from the previous year, and core operating profit of JPY8.1 billion, up JPY3.9 billion from the previous year. Therefore, we were able to secure an increase in sales and profits.

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As you can see on the left side of page 5, especially in terms of the results, the so-called canned beer business in Japan has continued to grow, and the RTD business has expanded. As for the North American business, in addition to the introduction of new ready to drink brands, sales volume of the Sapporo brand reached a record high thanks to growth in home-use products, and a recovery in commercial-use products.

In the food sector, lemon products are where we are seeing sustained, continuous growth. In addition, the restaurant business struggled, but we took this as an opportunity to strengthen it and we continued to implement structural reforms as usual. We closed 57 unprofitable stores in two years.

As a result of the sale of properties held by the Company, unrealized gains were realized, resulting in a final net income of JPY12.3 billion, JPY28.4 billion more than the previous year. We believe that we have made progress in strengthening our capital and improving our financial position.

What is the plan for FY2022. First of all, how do you see the market itself? Although there is still a sense of uncertainty about the effect of COVID-19 on part of the market in January and February, from a global perspective, we believe that the market will definitely improve, as some countries, such as Denmark, have begun to abolish all regulations. As a result, we are projecting a significant increase in sales due to a recovery in demand for restaurants, and growth in overseas alcoholic beverage sales.

Although there will be a slight increase in the cost of these activities, as well as an increase in raw material prices and costs associated with the resumption of activities, we are aiming to increase both sales and profits, and are aiming for JPY478.7 billion, and JPY10 billion in core operating profit for 2022. We would like to build on this. Specifically, we believe that we already know exactly what we have to do.

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I would like you to look at page 6.

In terms of our policy for 2022, in Japan, we will continue to strengthen our canned beer business, and focus on the growth of RTD. Overseas, we are aiming for growth in RTDs, and the growing Sapporo brand, where sales are expected to increase. As for food and beverages, we have lemon products and plants-milk. We are in the process of expanding this. In terms of real estate, we will continue to work towards the opening of Yebisu Garden Place this year, with the final renovations to be completed in November.

I would like to continue with the efforts we have been making for the past several years.

The Sendai beer plant will be renovated to produce RTD in-house. In addition to the benefits of in-house production, we would like to take steps to increase the productivity of beer production. In particular, we would like to optimize the location of our beer production facilities in North America. This has been our company's dream for many years, and we see it as something that we must do.

In the restaurant business, we will further strengthen our structure to return to profitability. Food and beverages will also be undergoing further structural reforms, and the entire company will be working to promote DX in earnest this year. We will spend money on IT human resources investment across the board. Therefore, we would like to promote efforts to produce IT human resources in all departments, not just in one IT department, through all employees, and sections.

So, although COVID-19 continues, and there is a sense of uncertainty, I believe that 2022 will be the foundation for activities that will lead to 2023, and beyond. This is why I gave you this explanation. That is all.

Moderator: Thank you very much for your presentation. Iwata will continue with the presentation. Please go ahead.

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