Main Q&As at FY2022 Q1 Financial Results briefing

A.Additional cost increases for the group as a whole could amount to 20 billion yen or more, mainly in raw materials and fuel costs, but market conditions are currently very volatile, and we are still in the process of examining these factors. Therefore, cost increases by region are only a rough outline, but we expect that Europe will have the largest impact, accounting for more than half of the total.　The remaining is expected to occur in Japan and Oceania half each. Countermeasures include additional cost reductions and top-line growth, as well as price revisions in each region.

A.In our Medium- to Long-Term Management Policy, we have set an annual average growth rate of Core Operating Profit in the high single-digit range, and we intend to increase profits in the next fiscal year as well. In the case of further cost increases, we will aim to increase profits by implementing additional measures such as cost efficiency measures and price revisions at appropriate times, as well as by improving the mix of products through a continuous recovery in the on-premise. In addition, we would like to create a virtuous cycle that leads to sustainable growth by investing the profits thus generated.

A.Although we plan to implement a price revision in October of this year, we assume that most of the effects will be seen in the next fiscal year, given the rush demand and other factors. At this stage, it is not possible to accurately estimate the scale of future cost increases, but we intend to cover the additional cost increase in this fiscal year and the impact of the cost increase in the next fiscal year by that. In Europe, price increases have already been implemented, but if additional cost increases necessitate additional pricing measures, we will consider and take action accordingly.

A.Costs increased by over 10 billion yen for the group as a whole. In Japan, Alcohol Beverages Business accounted for 2.5 billion yen and Non-Alcohol Beverages Business for 1.0 billion yen. The remaining approximately 7 billion yen was overseas.

A.The annual plan for on-premise is based on the assumption of about -40% from 2019 (around +30% YoY), but Q1 was about -60% from 2019 (around +20% YoY) due to the impact of Omicron and other factors. Looking at the current situation in April, it has recovered to about -40% of the 2019 level (+40% YoY), and we hope to make up for this by working to restore demand in the future. On the other hand, off-premise sales have been strong, and we intend to offset the impact of cost increases by further strengthening this business. In addition, canned containers of Asahi Super Dry are performing well, with an average increase of 12% YoY from March to April. New users are also being acquired steadily, and we have made a good start at a level that can be evaluated internally.

A.Q1 results were decrease in profit due to a reaction to the record-high profit last year associated with strong performance in each category, but it is on track to the annual forecast. However, we are constantly considering price revisions because the cost increase impact is significant and may not be covered by self-help efforts alone. We will continue to work on appropriate measures to maintain the industry's profit pool.

A.At this point, we expect no impact on production in Poland in the event of supply disruptions, as the government already has stockpiles and has prepared to switch its procurement of natural gas from Russia to other countries within this year. In addition, although there has been a temporary rise in the market price of gas, it has recently declined, and we believe that the impact on our business performance will be limited. We are also strengthening its risk response by formulating BCPs for each of our plants in anticipation of various contingencies.

A.At this point, we do not see any sales impact from inflation or the invasion of Ukraine. Unit prices in the off-premise market have increased by about +2% in the last three months. This year, companies including our company are implementing pricing revisions, but at this point, we do not see any major changes in consumption trends, and we believe that the trend toward premiumization will continue. However, the situation needs to be monitored closely. In terms of sales trends for off-premise, demand is recovering steadily, with the Czech Republic, for example, recording sales volumes higher than in 2019, the pre-Covid period, in the single month of March.

A.We expect a recovery mainly in the on-premise channel this year while we planned a lower profit in Q1 compared to the pre-Covid period, due to cost increases in raw materials and fuel costs, as well as higher marketing expenses for normalization and higher labor costs. Additional cost increases will be incurred each quarter. The entire group, including Europe, fixes about 80% of costs in each quarter through hedging, but the remaining 20% is procured on a spot basis, which is expected to result in an additional cost increase.

A.In Jan-Mar, sales volume was -3% YoY, while sales value was -2% YoY, and unit price has improved. However, profit growth in the first half is expected to be limited, based on the impact of cost increases, as we enter the off-season. In the second half, we expect profit growth through top-line growth, partly as a reaction to the impact of last year's lockdown, and aim to achieve the annual forecast. If further cost increases occur in the future, we will consider countermeasures including additional price revisions as necessary to achieve the annual forecast.