Asahi Group Holdings, Ltd.
Q3 2022 Financial Results Briefing — Key Points
Date & time: Thursday November 10, 2022; 16:00–17:00
Presenter:

Osamu

Ishizaka,

ExecutiveOfficer,

Headof

Corporate

Communications

Revenue and Core Operating Profit (P1)
• Total revenue for the nine months ended September 30 rose 10.3% year
on year to 1,849.9 billion yen. This was due to an increase in sales volumeand improvements in channel mix and unit sales prices in each region, as
well as a boost from anticipatory demand ahead of the price revisions inJapan in October.
• Total core operating profit increased 9.7% year on year to 176.9 billion yen.
The increase owes mainly to sharp profit growth in the July–September
period in Japan and Oceania, despite profit declining in Europe primarily asa result of higher costs driven by soaring prices of raw materials.
• We have not disclosed quarterly earnings forecasts, but core operating profit
for the Non-Alcohol Beverages Business in Japan in particular fell short ofour target due to higher-than-expected cost increases, but overall it is moreor less in line with plan.
• When adding on the impact of exchange rate movements, revenue was up
14.2% year on year and core operating profit 14.6% year on year.
Operating Profit and Profit Attributable to Owners of Parent (P2)
• Operating profit declined 5.1% year on year to 163.6 billion yen, mainlyreflecting the dropout of the year-earlier gain on the sale of non-current
assets and the booking of an impairment loss incurred from the SCM
reorganization in Japan that we announced in February.
• Profit attributable to owners of the parent company fell 8.1% year on year
due chiefly to the decrease in operating profit, but adjusted profit
1attributable to owners of the parent company increased 0.1% year on year
to 124.8 billion yen after excluding the impairment loss and other factors.
Both are in line with plan.
Improvement in Unit Sales Price and Variable Cost Increases (P3)
• First of all, the unit sales price for beer-type beverages in the three major
regions for the nine-month period through September continued to increase.
• In Japan, it rose 1.3% year on year, driven mainly by an improvement inthe category mix due to strong growth in canned beer sales.
• In Europe and Oceania, the unit sales price jumped 11.6% and 4.8% year
on year, respectively. These results reflect an improvement in the channel
mix on the back of a recovering on-premise market, along with a boost fromprice revisions.
• Cost increases for the nine months through September, which are shown at
the bottom of the page, came to approximately 55 billion yen overall
because raw material and energy prices continued to surge higher.
• As for our full-year forecast of cost increases, we do not expect any major
divergence from the 80 billion yen forecast that we disclosed at interimresults, even though mainly higher energy prices in Europe could have asomewhat bigger impact.
• And regarding cost increases next year, even though the prices of somecommodities are falling, the price of natural gas and other energy sources
remain at elevated levels, so at this point in time, it is still quite difficult toaccurately estimate costs.
• That said, our basic policy is to cope with higher costs stemming from pricevolatilitybyleveraging

cost

pass-alongs

and

more

stringentcost

management, and we will set our sights on achieving steady Group-wide
profit growth by practicing a style of management that can quickly respondto any kind of changes in the operating environment.

2

Japan (P4)
• Total revenue for the first nine months increased 11.0% year on year on
the back of an on-premise channel recovery and brisk sales of canned beer
mainly in the Alcohol Beverages Business, along with a boost from
temporary demand ahead of price revisions.
• Total core operating profit increased 17.4% year on year on profit growthin the Alcohol Beverages Business, which offset profit declines in the NonAlcohol Beverages Business and Food Business caused by higher variablecosts.
• Core operating profit overall is slightly behind plan. The Alcohol Beverages
Business was on target, but the Non-Alcohol Beverages Business fell shortof our estimate.
• The Non-Alcohol Beverages Business will probably struggle to reach its fullyear target, but we think the shortfall can be covered as much as possibleby the Alcohol Beverages Business. Thus, for Japan overall, we hope to turnresults around.
Japan (Alcohol Beverages Business: Revenue/Sales Volume) (P5)
• First, at the bottom-right of the page you can see year-on-year sales volume
for the overall beer-type beverages market in the nine months throughSeptember. New genre products contracted roughly 4% despite a boost
from anticipatory demand ahead of price revisions. However, the total forbeer-type beverages increased by some 9% year on year owing toconsiderable sales volume growth due to the recovery in on-premisedemand.
• In this market, sales of our new genre products also declined, but total
revenue for beer-type beverages still increased 19.2% year on year byvirtue of the recovery in on-premise demand and strong sales of cannedbeer that outperformed the industry average.
• Total sales volume fell short of plan mainly because the recovery in the onpremise beer market was weaker than expected, even though happoshu
3exceeded our forecast.
• While anticipatory demand ahead of price revisions was greater thanexpected in the overall market, we managed to capture demand in excessof the market average, with Super Dry can sales volume jumping 56% year
on year in the month of September.
• Sales contracted in October in the absence of anticipatory demand, but at
this point in time, there are no signs of a shift between categories or any
other major changes in market trends.
• With a view to the liquor tax revisions slated for October next year, we willcontinue to maintain and galvanize sales momentum by continuously
investing in the invigoration of the beer category. For example, we will growand expand the Nama Jokki Can and run consumer campaigns around theRugby Union World Cup.
• As for non-beer-type alcohol beverage categories, revenue for RTD lowalcohol beverages dipped slightly year on year due to the impact of market
stagnation, among other factors, but increased year on year for whiskeyand spirits, wine, and non-alcohol beer-taste beverages.

Revenue fromwhiskey and spirits and RTD low-alcohol beverages are tracking ahead ofplan.
Japan (Alcohol Beverages Business: Core Operating Profit) (P6)• Core operating profit in the Alcohol Beverages Business increased 34.9%
year on year. The main contributing factor was the boost to revenue mainly
from beer sales, which outweighed higher variable costs, such as for raw
materials and aluminum, and increased spending on advertising and sales
promotions for core brands.
• Even though the change in sales, category, and container mix came in below
plan, core operating profit overall is on track mainly because we kept a lid
on variable cost increases and streamlined advertisement and sales
promotion expenses and other expenses.

4• As for our outlook for the October–December quarter, even though weanticipate some pullback from anticipatory demand, we will continue toinvest mainly in the beer category, but we will still aim to meet our full-yeartarget by endeavoring to further streamline other costs.
Japan (Non-Alcohol Beverages Business: Sales Volume) (P7)• As you can see in the bottom-right of the page, the non-alcohol beverages
market overall in the nine months from January to September expandedroughly 4% year on year on the back of a recovery in sales following theCOVID-19 pandemic and a rebound from unseasonable weather in the peakseason last year.
• In this environment, total sales volume at Asahi Soft Drinks rose 4.9% year
on year to 199.46 million cases. This mainly reflects increased sales ofprimarily carbonated drinks, lactic acid drinks, and tea owing to the benefitsof revamping core brands and launching new products, even though salesof coffee declined.
• Also, even though revenue increased 2.5% year on year, overall it fell shortof plan because of a greater-than-expected deterioration in the unit sales
price mix caused by weak coffee sales.
• In the Non-Alcohol Beverages Business as well, we saw some anticipatory
demand materialize ahead of price revisions, but shipments have already
returned to normal levels and at this point in time we see no signs of any
major changes in trends after prices were revised.
• Even though the competitive environment is growing increasingly fierce, ourpolicy going forward will be to step up marketing investments mainly in ourcore brands where we can leverage our strengths.
Japan (Non-Alcohol Beverages Business: Core Operating Profit) (P8)
• Total core operating profit in the Non-Alcohol Beverages Business fell 13.1%
year on year. The main contributing factor was the considerable impact ofhigher variable costs for sugar and other raw materials, despite sales growthin this business and our best efforts to keep costs down through5

improvements in capacity utilization and the streamlining of other expenses.
• Total core operating profit fell short of plan mainly because the boost fromsales growth was below target and variable cost increases were higher thanexpected,

eventhoughwetooksteps

tostreamline

additional

advertisement and sales promotion expenses.
• We will continue to target a recovery in core operating profit as much as
possible by turning sales volume around, improving unit sales prices, andfurther bolstering efforts to streamline general fixed costs, including
expenses related to the vending machine business.
Europe (P9)
• Total revenue for the nine months through September increased 13.7%
year on year thanks to a 2.7% year-on-year growth in sales volume
centering on the premium category and global brands, channel mix
improvement driven by a recovery in the on-premise market, and a boost
from the effects of price revisions, etc.
• Core operating profit declined 2.9% year on year because we were unable
to absorb increased marketing expenses associated with the resumption ofeconomic activity and brand-building investments, although we did manage
to offset higher variable costs through sales volume growth and the impactof price revisions.
• Revenue came in slightly below plan, but core operating profit is more orless on target due mainly to efforts aimed at improving the efficiency ofgeneral fixed costs.
• As shown at the bottom of the page, we have continued to maintain andexpand the strength of our business fundamentals in Europe overall, asindicated mainly by improvement in the channel mix owing to the onpremise market recovery and unit sales price improvement driven primarily
by price revisions, as well as a growing share of the off-premise market in
the six major countries, including the Czech Republic, Romania, and Italy.

6• If the impact of soaring energy prices are greater than expected, full-year
core operating profit could fall slightly short of plan, but I have confidence
in the countermeasures and growth strategies of local management toastutely respond to changes in the operating environment.
• Changes in consumer sentiment brought about by inflation will also bear
watching, our policy will be to press ahead with strategies for growth froma medium- to long-term perspective by continuing to unwaveringly invest
in our premium strategy in anticipation of a recovery in the macroenvironment.
Oceania (P10)• Total revenue for the January–September period for both the Alcohol
Beverages Business and Non-Alcohol Beverages Business grew 5.3% year
on year.
• The middle of the table shows a breakdown. Total net sales excluding liquor
tax increased 6.8% year on year for alcohol and non-alcohol beverages asa result of not only growth in sales volume centering on core brands, butalso channel mix improvement driven by a recovery in the on-premisemarket and a boost from the effects of price revisions.
• Even though variable costs continued to climb higher, core operating profit
still rose 9.7% year on year by virtue of mainly higher sales and thestreamlining of fixed costs, including sales promotion expenses.
• Both revenue and core operating profit are currently in line with plan, andwe have our sights set on achieving our full-year targets primarily bymaximizing sales of mainly core brands in the upcoming peak season andby further strengthening cost management.
• The table at the bottom of the page shows sales in the Australian Alcohol
Beverages Business. In addition to mainly Great Northern, sales of SuperDry and other imported premium beers were brisk, but sales in the offpremise channel still declined in the low single digits range chiefly becauseof a negative impact associated with the recovery of the on-premise channel.
7• In the on-premise channel, sales rebounded in the July–September period
in the absence of the year-earlier lockdown, thereby driving a 120% yearon-year recovery and underpinning a year-on-year increase of around 20%
for the nine months through September.
• As a result, the unit sales price for beer-type beverages rose from 2.8% to4.8% year on year in the first half due to a sharp improvement in thechannel mix and the impact of price revisions.
• As for consumption trends, at this juncture we see no indications of sales
volume declines, trading down, or any other structural changes in themarket, so going forward, even in this tough operating environment, weplan to drive the Group’s earnings recovery with appropriate revenue
management and even better cost efficiency.

8