2008

Sapporo Group 2008 Results
Presentation
February 16, 2009

Sapporo Holdings Ltd.
URL http://www.sapporoholdings.jp/
Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

AgendaI. Overview of 2008 Business Results and 2009 Earnings Forecasts
1. Overview of 2008 Business Results◆ Sapporo Group as a whole◆ By segment
2. 2009 Earnings Forecasts◆ Sapporo Group as a whole◆ By segment
II. Sapporo Group 2009-2010 Management Plan
1. Basic policy and goals
2. Strategy by segment
3. Overall strategy
4. Shareholder returns policy*These materials contain forward-looking statements, which are based on information available when thematerials were prepared and are subject to risks and uncertainties. Actual performance may differ materially fromthe future outlook described for various reasons.
Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

1

I-1.

Overview of 2008 Business Results

Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

2

Overview of 2008 Business Results
Net sales, operating income, ordinary income,and net income

2005

2006

2007

billions of yen
2008

16.0
453.6 435.0 449.0 14.6
414.5
14.0
12.3
10.5
12.0 10.3
10.0
8.6
7.6
8.1
8.0
6.6
5.5
5.8
6.0
3.6
4.0
2.3
2.0
0.0
Operating income
Net income

Business Results over theLast Four Years
30.0

500.0

25.0

400.0

20.0

300.0

15.0

Financial liabilities, capital investment,
and depreciation and amortization
2005

220.7

2006

2007

300.0

236.0
212.4
200.0
189.2

10.0

200.0

2008 billions of yen

100.0

5.0
100.0

0.0

0.0

0.0
Capital investment
Depreciation and amortization
billions of yen
Financial liabilities

Ordinary income
Net sales<2008: Key points>
Fallininnet
netsales,sales,riseriseinincost
costofofraw
rawmaterials
materialsandandFallingredients,
strongeryen,
impairment
loss
ingredients, stronger yen, impairment loss

Toleranceto
totop
toplinelinefluctuations
fluctuations
Tolerance
Debtreductions
reductions
Debt

Steadyreformreformofofearnings
earningsstructure
structure
SteadyRestructuringofof
Restructuringsoftdrinksbusinessbusiness
soft drinks
Strictercontrol
controlofofsales
sales
Stricterpromotionexpenses
expensespromotion

Continued upward trend in earnings
Continued upward trend in earnings
Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

Realignmentofofproduction
productionfacilities,
facilities,
Realignment
reshufflingofofproperty
propertyportfolio
portfolio
reshuffling3

Overview of 2008 Business Results (All Businesses)
Business Resultsby Segment
2008

10.0
7.7

8.0
25.0

52.2

6.0
36.8

28.9

29.5

24.1

23.4

1.6

0.9

0.2

0.6 0.5

0.0(2.0)

Alcoholic
Beverages(Japan)Real Estate

Restaurants

Soft Drinks

beverages

Alcoholic(Overseas)(Japan)beverages

7.6

4.0
2.0

Alcoholic

7.0

6.1

(0.8)

Real Estatebillions of yen

27.7

2007
2008

billions of yen

Restaurants

2007

299.6

Soft Drinks

315.8
350
300
250
200
150
100
50
0

Operating income

Alcoholic
Beverages(Overseas)

Net sales

Posted profits in all business segments

First time after the transition to pure holding company in 2003
Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

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Overview of 2008 Business Results by Segment: Key Points (1)AlcoholicBeverages
Beverages(Japan)(Japan)AlcoholicMarketenvironment:
environment:Price
Pricehikes
hikesininthe
thefoodfoodindustry,
industry,consumer
consumerbelt
belttightening,tightening,total
totaldemand
demandMarketdownbyby2.5%
2.5%from
fromlast
lastyear,
year,consumer
consumerpreference
preferencefor
forlow
lowprices,
prices,price
price
down
revisionsby
byall
allJapaneseJapanesebrewers,
brewers,risingrisingcost
costofofraw
rawmaterials
materialsand
andrevisionsingredients,focus
focusononfoodfoodsafety
safetyandandreliability
reliability
ingredients,

Ourefforts:
efforts:Price
Pricerevision
revisionininApril,
April,focus
focusononmainstay
mainstaybrands,
brands,expanded
expandedsales
salesofofnew
newgenregenre
Our
productMugi
MugitotoHop,
Hop,stricter
strictercontrol
controlof
ofsalessalespromotion
promotionexpenses
expensesininaccordance
accordance
product
withprofitability
profitabilitygoals,
goals,improved
improvedcapacity
capacityutilization
utilizationthroughthroughrealignment
realignmentofofwithproductionfacilities
facilities
production

AlcoholicBeverages
Beverages(Overseas)(Overseas)
AlcoholicMarketenvironment:
environment:Financial
Financialcrisis
crisisÆ
Æeconomic
economicslowdown
slowdownininthe
theU.S.,
U.S.,nominal
nominaldemand
demandMarketgrowthininNorth
NorthAmerican
Americanbeer
beermarket
marketgrowthPremiumÆ
ÆValue,Value,risingrisingcost
costofofraw
rawmaterials
materialsand
andingredients,
ingredients,stronger
stronger
Premiumyenyen
Ourefforts:
efforts:Aggressive
Aggressivemarketing
marketingÆ
ÆSalesSalesvolume
volumeupup8%8%atatSleeman
SleemanBreweries,
Breweries,up
up9%9%atatOur
Sapporo USA
USA
SapporoLaunchedtest
testmarketing
marketingof
ofYebisu
YebisuLaunched
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Overview of 2008 Business Results by Segment: Key Points (2)SoftDrinks
DrinksSoft
Marketenvironment:
environment:Economic
Economicslump,slump,consumer
consumerbelt
belttightening,tightening,continued
continuedintense
intenseMarketcompetition,total
totaldemand
demanddown
down1%
1%fromfromlast
lastyear,
year,risingrisingcost
costofofraw
raw
competition,materialsand
andingredients
ingredientsmaterials

Ourefforts:
efforts:Accelerated
Acceleratedimplementation
implementationof
ofbusinessbusinessrestructuring
restructuringmeasures
measuresby
by“selection“selectionandandOur
focus”(restoring(restoringprofitability
profitabilityatatoperating
operatingincome
incomelevel)
level)
focus”↓↓
Reviewof
ofunprofitableunprofitabletransactions,transactions,streamlining
streamliningof
oforganizationalorganizationalstructure,
structure,
Reviewefficientuse
useof
ofsalessalespromotion
promotionexpenses,
expenses,buildingbuildingown
ownbrands
brandsefficient

Restaurants
Restaurants
Marketenvironment:
environment:(First(Firsthalf)half)Surging
Surginggasoline
gasolineprices
pricesÆ
Æ sluggish
sluggishsales
salesininsuburban
suburbanareas
areas
Market(Secondhalf)half)Rapid
Rapideconomic
economicslowdown
slowdownÆ
Ædirect
directimpact
impactononoutlets
outletsinin(Secondcategorieswith
withhighhighaverage
averagesales
salesperpercustomer
customercategories

Ourefforts:
efforts:“Safety,“Safety,Reliability
Reliabilityand
andAuthenticity,”
Authenticity,”improvement
improvementof
ofand
anddifferentiationdifferentiationininmenu
menu
Our
selectionsand
andservice
servicequality
qualityselections
Meritsof
ofurbanurbanstore
storelocation
locationÆ
ÆSameSamestore
storesales
salesremained
remainedunchanged
unchanged
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Overview of 2008 Business Results by Segment: Key Points (3)RealEstate
EstateRealMarketenvironment:
environment:Credit
Creditcrunch
crunchÆ
Æ realrealestate
estateslump,slump,worsening
worseninghousing
housingmarket
marketconditions,conditions,Marketincreasedcentral-Tokyo
central-Tokyooffice
officevacancy
vacancyrate,
rate,drop
dropininrent
rentlevels
levelsincreased

Ourefforts:
efforts:Expanded
Expandedreal
realestate
estateportfolio
portfolio
Our↓↓
Propertydevelopment
developmentinin Ebisu,
Ebisu,Shinjuku,
Shinjuku,etc.
etc., ,acquisitionacquisitionof
ofnew
new
Property
incomeproperties
propertiesin
inthe
theTokyoTokyoMetropolitan
Metropolitanarea
area
incomeMaintenanceof
ofhighhighoccupancy
occupancyrates
ratesforforexisting
existingproperties,
properties,rent
rent
Maintenancerevisions,value
valueenhancement
enhancementof
ofYGP
YGPproperties
properties
revisions,

Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

7

I-2.

2009 Earnings Forecasts

Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

8

２００８年度通期業績見込み
2009 Earnings Forecasts- Earnings ForecastsNet sales, operating income, ordinary income, andnet income

Financial liabilities, capital investment, and depreciation
and amortization

billions of yen
2006

20.0
15.0
10.0
5.0

2007

2008

2009

2006

500.0
435.0 449.0
408.3
400.0
14.6414.5
12.3
12.0
300.0
10.5
8.6
8.5
8.1
7.6
200.0
5.5
5.8
3.0
2.3
100.0
0.0

0.0
Operating income
Net income

billions of yen
2007

2008

2009

30.0

400.0

25.0
20.0

236.0

300.0
212.4

15.0

200.0
188.0

10.0

100.0

5.0
0.0

Ordinary income
Net sales

189.2

0.0
Capital investment
Financial liabilities

Depreciation and amortization<Earningsforecasts:
forecasts:key
keypoints>
points><Earnings
Negativefactors
factors
Negative

Measuresto
toensure
ensureMeasuressustainablegrowth
growthsustainable

Buildononcompetitivecompetitive
Buildstrength
strength
Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

Strengthen
Strengthen
earningsbase
baseearnings

・Weakeningeconomy
economy・Weakening
・Fallingoverall
overalldemand
demand・Falling
・Risingraw
rawmaterialmaterialandand・Rising
ingredients
costs
ingredients costs
・Changesininaccounting
accounting
・Changesstandards
standards
・Impactofofforeignforeign・Impact
exchangerates
exchange rates
92009 Earnings Forecast by Segment- Earnings Forecast by Segment (billions of yen)

Net sales

2008 actual2009 forecast(billions of yen)

Operating income

2008 actual2009 forecast

Alcoholic Beverages(Japan)

299.6

295.6

Alcoholic Beverages(Japan)7.7

5.6

Alcoholic Beverages(Overseas)

25.0

22.1

Alcoholic Beverages(Overseas)

0.9

0.9

Soft Drinks

36.8

35.5

Soft Drinks

0.2

0.3

Restaurants

29.5

30.5

Restaurants

0.5

0.7

Real Estate

23.4

24.6

Real Estate

7.6

7.7

<Keypoints
pointsbybysegment>
segment><KeyAlcoholicBeverages
Beverages(Japan):(Japan):Work
Worktotoachieve
achieveannual
annualsales
salestargets,targets,withwithfocus
focusononYebisu
Yebisuandandnew
newgenre
genreMugi
MugitotoAlcoholic
Hop,
Draft
One
and
ReiseiSAPPORO,
which
offersanaltogether
new
taste
Hop, Draft One and Reisei SAPPORO, which offers an altogether new taste
AlcoholicBeverages
Beverages(Overseas):(Overseas):Expand
Expandsales
saleswithwithaggressive
aggressivemarketing
marketingefforts
effortsininNorth
NorthAmerica
Americaand
andemerging
emergingAlcoholicmarkets
markets
SoftDrinks:
Drinks:Continue
Continuewith
withthetheefforts
effortstotoregain
regainprofitability,
profitability,continue
continuepromotion
promotionofofgrowth
growthstrategy,
strategy,relaunchrelaunchSoftthanniversary,andandacquireacquiremarket
marketshare
sharewith
withSapporo’s
Sapporo’sown
ownproductproduct
RibbonCITRONCITRONwhich
whichisiscelebratingcelebratingits100
its100th anniversary,
Ribbonline-upincludingGerolsteiner
line-up including Gerolsteiner
Restaurants:Hold
Hold110th
110thanniversary-related
anniversary-relatedevents,
events,open
opensmallsmalland
andmedium-sized
medium-sizedestablishments
establishmentsininnew
newformat
formatRestaurants:
andimplement
cost
structurereformsand implement cost structure reforms
RealEstate:
Estate:Property
Propertydevelopment,
development,acquisitionacquisitionofofnew
newincomeincomeproperties,
properties,profitability
profitabilityimprovement
improvementthroughthroughRealmaintenance/improvementofoccupancy
rates
maintenance/improvement of occupancy rates
Food:Launch
Launchnon-fried
non-friedpotato
potatochips
chipsSapporo
SapporoPotekaru
Potekaruand
andenterenterthetheyogurt,
yogurt,dessert
dessert andandchilledchilleddrink
drinkbusinessbusinessFood:
Exchange rate conversions: 2008 USD/JPY 103.49, CAD/JPY 97.97; 2009 USD/JPY 90.00, CAD/JPY 75.00
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10

II-1.

Sapporo Group 2009–2010 Management Plan
Basic Policy and Goals of Management Plan

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Management Plan: Basic Policy and Goals<Management Plan: Basic Policy>○ Position the 2-year plan (2009-2010) as a roadmap for the implementation of the
new management framework with a view to 2016
Position 2009-2010 as the “period to build the base for a shift to the next growthphase”○ Crucial themes of the 2009-2010 management plan
◇ Achieve sustainable growth◇ Expand business by leveraging on competitive strength, and strengthen earnings base
○ Points to be reviewed in the rolling plan against changing environment
Review the assumptions underlying the business strategies based on a conservative
assessment of the external environment for the foreseeable future.
◇ Continue with efforts to build a base to achieve stable earnings amid changing
market conditions◇ Make strategic investments based on strict risk assessments taking into accountthe current market environment◇ Enter new markets by pursuing opportunities for overseas business expansion◇ Build a low cost structure for the Group as a whole
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Operating income

Net sales

Management Plan: Basic Policy and Goals
2009 target

2010 target

New Management
Framework (2016)

Overall¥408.3 bn¥413.1 bn¥600.0 bn

Alcoholic Beverages(Japan)Alcoholic Beverages(Overseas)¥295.6 bn¥296.0 bn¥350.0 bn¥22.1 bn¥23.0 bn¥42.0 bn

Soft Drinks¥35.5 bn

¥36.7 bn¥70.0 bn

Restaurants¥30.5 bn

¥31.4 bn¥50.0 bn

Real Estate¥24.6 bn¥26.0 bn¥50.0 bn

Overall¥12.0 bn

¥14.7 bn

¥40.0 bn

Alcoholic Beverages(Japan)Alcoholic Beverages(Overseas)¥5.6 bn¥6.1 bn¥15.0 bn¥0.9 bn¥1.0 bn¥5.0 bn

Soft Drinks¥0.3 bn¥0.8 bn¥2.0 bn

Restaurants¥0.7 bn¥1.0 bn¥2.5 bn

Real Estate¥7.7 bn¥8.1 bn¥15.0 bn

Group Total(¥3.2 bn)(¥2.3 bn)(¥2.5 bn)

Exchange rate conversions: 2009-2010 USD/JPY 90, CAD/JPY 75

Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

13

II-2.

Sapporo Group 2009–2010 Management Plan
Strategies by Segment

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14

Strategies by Segment (1)<Alcoholic Beverages (Japan)>○ Allocate management resources selectively on mainstay products in the beer category- Concentrate management resources on Yebisu brand to further the presence in the high-end market- In the new genre market with growth potential, enhance the alcoholic beverages portfolio by bolstering
Draft One and Mugi to Hop, in addition to offering “new flavor and value”○ Strengthen the cost control structure- Establish flexible production system enabling minimum production lead time, ensure energy savings,
and strengthen the framework for rigorous control of marketing and transportation expenses○ Create new value- Bolster R&D and product development structures with the aim of creating high value-added products<Alcoholic Beverages (Overseas)>○ Canadian Market- Implement selective marketing investment in Sleeman’s major premium brands- Improve productivity at all plants, promote measures towards production cost reductions○ U.S. Market- Achieve further brand penetration by strengthening the sales force and identifying important regions
and customers

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15

Strategies by Segment (2)<Soft Drinks>○ Ensure development and enhancement of existing brands and products
・ Bolster brand strength by focusing management resources on mainstay products led by Ribbon
CITRON, which is celebrating its 100th anniversary, and including Gerolsteiner, Karada ni Oishii Ume,
Ocean Spray Cranberry, and Gabu Nomi
○ Implement further cost structure reforms- Implement cost structure reforms such as reviewing unprofitable transactions, selectively
approaching different geographical regions, and reviewing geographical strategy and other strategic
initiatives at the operator subsidiaries- Promote measures such as reduction of losses resulting from over-supply, excess inventory andinventory disposal, and organizational streamlining of distribution centers and order system<Restaurants>○ Bolster sales at existing restaurants- Promote revitalization of existing restaurants through quality enhancement such as menu revisions
and improved service○ Restaurant opening policy reflecting the economic conditions- Open small- to medium-scale restaurants in new format○ Cost structure reform- Improve efficiency of personnel costs by introducing a new system to improve efficiency ofattendance management and carry out centralized hiring to reduce recruiting cost
- Reduce expenses by implementing stricter control over sales promotion costs through measures
such as internet-based sales promotion and sales discount
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Strategies by Segment (3)<Real estate>○ Boost the value of Yebisu Garden Place properties- Promote measures to obtain higher rents for office spaces as well as to maintain high occupancy rate
- Implement measures to enhance building functionality through investments in the renovation of
Nibankan rental housing and in energy-saving measures○ Promote the development of properties primarily in the Tokyo Metropolitan area
- Develop properties including the acquired property in Shinjuku 6-chome (commercial/office building to
be completed in 2010), and the property adjacent to Yebisu Garden Place (commercial/dining facility
to be completed in September 2009)○ Acquire new properties primarily in Tokyo- Identify and acquire new properties with focus on the Ebisu area as the strategic area
- Improve the value of newly acquired properties by harnessing synergy effects with existing properties<Food>○ Sapporo Finefoods’ confectionary business- Introduce non-fried Sapporo Potekaru, developed using proprietary technology, in the Tokyo
Metropolitan area in February and aim to boost brand awareness at an early stage○ Enter the yogurt, dessert and chilled drink business- Initiate efforts for growing the yogurt, dessert and chilled drink business under the basic agreementon business alliance concluded with Marudai Food Co., Ltd. last October.

Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

17II-3.

Sapporo Group 2009–2010 Management Plan
Overall Strategy

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18

Overall Strategy<Strategic investment basic policy>○ Strategic investment for future growth of the Group- As vital undertakings toward future growth of the Group, strategic investments will be clearly focused,
and will be made based on more conservative assessment of risks and opportunities, with priorities
placed on M&As in the food business for creating new values and overseas expansion.
○ Review of investment plans to reflect economic situation- Shelved the Group’s plans for developing the former Osaka plant site given the prevailing real estatemarket condition<Harness Group synergies>○ Share management resources and infrastructure among group companies- Develop Group-wide framework for research, product development and quality control including the
new food business- Build a framework to ensure enhanced low-cost operation through measures including integration ofgroup IT infrastructure and consolidation of support divisions<Promote CSR management>○ Efforts based on Sapporo Group CSR Policy- Promote measures addressing “food safety-related issues,” “alcohol-related issues including drunkdriving,” and ”environment and global warming”

Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.

19II-4.

Sapporo Group 2009–2010 Management Plan
Shareholder Return Policy

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20

Shareholder Return Policy<Basic philosophy>- The Group attaches utmost importance to appropriate profit distribution to its
shareholders. The basic policy is to maintain stable dividend payments after taking into
account the business performance and financial standings.

<Dividend policy>- The Group intends to pay an annual dividend of 7 yen per share of common stock, up
2 yen per share, for fiscal year 2008
- For fiscal year 2009, the Group expects to maintain the annual dividend at 7 yen per
share of common stock while firmly implementing measures under the management plan

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21

2008

Sapporo Group 2008
Results Presentation

Thank you for your attention.

Copyright,2009 SAPPORO ＨＯＬＤＩＮＧＳ LTD. All rights reserved.