Sapporo : Financial Results for the three months ended March 31 2021：Consolidated（Based on IFRS）

Financial Results

for the three months ended March 31, 2021 - Consolidated (Based on IFRS)

May 7, 2021

Company name	Sapporo Holdings Limited
Security code	2501
Listed on	Tokyo Stock Exchange (First Section); Sapporo Securities Exchange
URL	https://www.sapporoholdings.jp/english/
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	May 14, 2021
Commencement of dividend payments	-
Supplementary information to the year-end 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, 2021 (January 1 - March 31, 2021)

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

(1) Operating Results

(Percentage figures represent year-over-year changes)

Revenue

Core Operating profit

Operating profit

Profit

million yen

%

million yen

%

million yen

%

million yen

%

Three months ended

89,894

(9.9)

(6,852)

_

(6,160)

_

(5,248)

_

March 31, 2021

Three months ended

99,824

(1.1)

(6,197)

_

(6,078)

_

(4,704)

_

March 31, 2020

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

(5,199)

_

(615)

_

(66.75)

(66.75)

March 31, 2021

Three months ended

(4,649)

_

(18,591)

_

(59.69)

(59.69)

March 31, 2020

Note: Profit before tax

Three months ended March 31, 2021

(6,230) million yen

Three months ended March 31, 2020

(6,304) 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.

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(2) Financial Position

	Total assets	Total equity	Equity	Ratio of
			attributable to	equity attributable
			owners of parent	to owners of parent
				to total assets
	million yen	million yen	million yen	%
Three months ended	602,413	145,640	145,889	24.2
March 31, 2021
Year ended	616,349	149,551	149,781	24.3
December 31, 2020

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		-	-		-	42.00	42.00
31, 2020
Year ending December		-
31, 2021
Year ending December			-		-	42.00	42.00
31, 2020 (forecast)

Note: Changes to the latest dividend forecast announced: 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 profit	Profit		Profit attributable to	Basic
				operating profit						owners of parent	earnings
														per share
	million yen		%	million yen		%	million yen	%	million yen		%	million yen	%	%
Year ending	468,200		7.7	9,000		111.2	18,000	_	12,000		_	12,000	_	154.05
December 31,
2021

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

*Earnings forecasts for the six months ending June 30, 2021 are omitted because the company manages performance targets on a yearly basis.

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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)
5. 1. Number of shares issued at end of period (treasury stock included):

March 31, 2021: 78,794,298 shares

December 31, 2020: 78,794,298 shares

1. Number of shares held in treasury at end of period: March 31, 2021: 897,542 shares
   December 31, 2020: 896,951 shares
2. Average number of outstanding shares during the period: Three months ended March 31, 2021: 77,897,031 shares Three months ended March 31, 2020: 77,895,889 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 (3) Consolidated Earnings Forecast" on page 6.

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.

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1. Analysis of Operating Results and Financial Condition

(1) Operating Results

In the first quarter of 2021 (January 1 to March 31, 2021), the Group was impacted by Japan's re-issuance of a state of emergency due to the COVID-19 pandemic, which caused sales of commercial-use beer, sales of beverages in vending machines, and sales to restaurants such as beer halls, to decline compared to the previous first quarter.

As a result, core operating profit declined year on year with the exception of the Food & Soft Drinks segment. Operating profit and net profit attributable to owners of the parent were down year on year.

1) Summary in key figures

Millions of yen, except percentages

	Revenue	Core operating profit	Operating profit	Profit attributable to
	owners of parent
Year ended March 31, 2021	89,894	(6,852)	(6,160)	(5,199)
Year ended March 31, 2020	99,824	(6,197)	(6,078)	(4,649)
Change (%)	(9.9)	－	－	－

*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
	Year	Year		Year	Year		Year	Year
	ended	ended	Change	ended	ended	Change	ended	ended		Change
	Mar. 31,	Mar. 31,	(%)	Mar. 31,	Mar. 31,	(%)	Mar. 31,	Mar. 31,		(%)
	2020	2021		2020	2021		2020	2021
Alcoholic	63,373	56,635	(10.6)	(4,607)	(5,022)	－	(4,534)	(4,453)		－
Beverages
Food & Soft	30,338	27,579	(9.1)	(1,388)	(1,089)	－	(1,395)	(1,028)		－
Drinks
Real Estate	6,073	5,635	(7.2)	1,198	719	(40.0)	1,192	728		(39.0)

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.

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 90% 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 116% and 119% of the previous year's level, respectively. In the new genre category, the revamping of Sapporo Gold Star, which marked its first anniversary, proved successful, with an increase of 3% year on year in sales volume. As a result of the above, total sales of beer and beer- type beverages stood at 89% of the year-earlier level.

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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 significantly impacted by the COVID-19 pandemic. Total demand in North America for beer and beer-type beverages is estimated to have fallen year

on year in Canada, but is recovering in the United States.

Under this trend, overseas brand beers were almost same year on year in sales volume, buoyed by Sleeman Breweries, which shows a strong performance in sales of home-use products. Sales of Sapporo brand beer were down year on year, since the commercial-use market slumped primarily owing to operating restrictions placed on restaurants in the United States.

Restaurants

The entire restaurant industry, including pub restaurants and izakaya, has been suffering substantial impacts from the COVID-19 pandemic since 2020.

Amidst these challenges, the Company's Restaurants business experienced a decline in both revenue and profits year on year, despite 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 in the first quarter of 2021 came to ¥56.6 billion (down ¥6.7 billion, or 11% year on year), while the segment posted a core operating loss of ¥5.0 billion (compared with a loss of ¥4.6 billion in the first quarter of 2020) and an operating loss of ¥4.5 billion (compared with a loss of ¥4.5 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 lntage SRI market research on combined blended imo shochu sales in the supermarket, convenience store, and direct sales channels from July 2019 through March 2021.

Food & Soft Drinks

Demand in the commercial-use market and vending machines has been affected significantly by the COVID-19 pandemic. Total demand in Japan for food and soft drinks is estimated to have only reached 94% of the previous year's level.

Against this backdrop, in the domestic soft drink business, sales of lemon-based soft drinks were strong on rising health consciousness, but this strength could not completely cover the decline in sales volume of vending machines, resulting in a year-on-year drop in total sales volume of soft drinks.

In the domestic food business, sales volume of soup dropped from the past year following a reactionary decline from the demand for stay-at-home consumption seen in the previous year.

Lemon-based food products grew substantially in sales by 20% year on year, as Pokka Lemon 100 recorded increased sales in both small and large sizes amid widening uses. Plant-based milk products also saw a year-on-year increase in its sales volume, with our soymilk yogurt products contributing to this increase.

Pokka Create Co., Ltd., which operates the Café de Crié coffee shop chain, saw revenue fall year on year due to the ongoing impacts the cafe industry has experienced under the COVID-19 pandemic.

As a result of the above factors, revenue in the Food & Soft Drinks segment in the first quarter of 2021 came to ¥27.6 billion (down ¥2.8 billion, or 9% year on year), while the segment posted a core operating loss of ¥1.1 billion (compared with a core operating loss of ¥1.4 billion in the first quarter of 2020) and an operating loss of ¥1.0 billion (compared with a loss of ¥1.4 billion a year earlier).

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