Sapporo : 2Q (Online Meeting) Q&A(1.5MB)

Sapporo Holdings Limited

Q2 Financial Results Briefing for the Fiscal Year Ending December 2023

August 10, 2023

Event Summary

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Presentation

Moderator: Hello. Thank you for attending today's financial results briefing for Q2 of FY2023 of Sapporo Holdings Limited. In attendance today are Mr. Masaki Oga, President and Representative Director of Sapporo Holdings Limited, Mr. Yoshitada Matsude, Managing Director of Sapporo Holdings Limited, and Mr. Hiroyuki Nose, President and Representative Director of Sapporo Breweries, Limited.

Please have at hand the financial results, supplementary information to the financial results, and financial results presentation material. Mr. Oga and Mr. Matsude will provide an overview of the financial results for approximately 30 minutes based on the PowerPoint presentation material, followed by a Q&A session. The entire meeting will last approximately 1.5 hours.

Mr. Oga will now begin the explanation.

Oga: Good evening. I am Oga of Sapporo Holdings. Thank you for your time today.

Now, I would like to explain the summary.

For the period under review, revenue was JPY238.5 billion, an increase of JPY24.7 billion from the previous year, and core operating profit was JPY3.5 billion, an increase of JPY5.7 billion. Operating profit was negative JPY2.8 billion and profit attributable to owners of parent was negative JPY5.1 billion, for declines from the previous year. We consider this to be a one-time cost impact, due to the loss incurred in connection with the dissolution of Anchor Brewing Company, LLC, which was recently resolved to be dissolved.

We are steadily absorbing cost increases in raw materials and other items through price revisions, and with the recovery of the business itself, we believe that our performance is progressing steadily and above plan.

The first major topic is the steady recovery in sales volume of commercial-use products in the alcoholic beverages business and sales at existing restaurants in the restaurant business.

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This means that sales for commercial use are increasing. In fact, total demand for beer cans is decreasing, but results for canned Black Label continue to exceed those of the previous year. In RTD products, in addition to the core brands, new Shin Lemon Sour performed well, driving growth.

In addition, the trend of strong sales of the Sapporo brand overseas continued.

Furthermore, we believe that the effects of the structural reforms in the restaurant business and the food and Soft drinks business, which we have been implementing since the time of the COVID-19 pandemic, are steadily contributing to profits.

Here you see our sustainability management initiatives, which are set forth in our medium-term management plan. I would like to introduce two major initiatives that have made progress.

The Sapporo Group Environmental Vision 2050, set for 2019, updates the greenhouse gas emissions reduction targets.

Once the 2022 results were finalized last year, we updated our 2030 targets to higher goals that meet SBT's certification criteria. Scope 1 and 2 are targeted at a 42% reduction from the 2022 level, and Scope 3 is targeted at a 25% reduction from the 2022 level.

In addition, the FLAG scope, which covers gas emissions from forest, land, and agriculture to the farm gate of the so-calledland-intensive portion of the food sector, has been updated to a major target of a 31% reduction from 2022 levels.

In addition, Sleeman Breweries of Canada was selected as one of the 100 most environmentally conscious companies. As a result of promoting initiatives with employee participation, this company was selected as one of Canada's Greenest Employers 2023.

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This table lists the sustainability goals that have already been announced, the newly established goals, and last year's results. See later.

That is all for my presentation.

Moderator: Thank you for your explanation. Mr. Matsude will now make an explanation.

Matsude: I would like to add some additional information. As for core operating profit and other profits, a loss from the dissolution of Anchor Brewing Company of JPY5.3 billion was posted for the quarter under review. In addition, the decrease in profits was partly due to the absence of other operating revenues such as gains on sales of real estate in the previous year.

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