Main Q&A at H1 FY2026 Financial Results Briefing

A.The first thing I would say is that we have finally been able to return our financial results disclosure to the normal schedule and build an environment that facilitates the communication of various information to investors. Going forward, we believe it is important to promote the premium strategies that we have been concentrating on so far, such as expanding Global Brands, and to present quantitative strategies and build a steady track record in growth areas such as Beer Adjacent Categories (BAC), which includes non-alcohol adult beverages, RTDs, and adult soft drinks. We will also strive to improve productivity by utilizing AI and advance earnings structure reforms.
In addition, in June 2026, we refreshed our corporate philosophy, the Asahi Group Philosophy, and are now promoting discussions on long-term strategies, business portfolios, and necessary capabilities based on that philosophy. We plan to present an updated long-term strategy that reflects the content of those discussions around the time of the financial results announcement in February 2027.

A.The traditional Asahi Group Philosophy was not intricately linked with our medium- to long-term strategy and changing employee behavior. We also wanted to shift the focus from “what kind of company and people we want to be” to “what and how can we contribute to society” in order to increase employee motivation. As consumer environments continue to change, we feel that mass production and mass sales alone are not enough to sustainably promote growth. We want to serve as a company that creates shared moments full of life through great taste and great products, bringing people together and fostering a sense of belonging. That is the world we want to create. This concept is reflected in the refreshed Asahi Group Philosophy, and we plan to incorporate these ideas into our long-term strategy and concrete initiatives going forward.

A.Progress on achieving our key indicator guidelines has been delayed beyond initial expectations due to the impact of the 2025 system disruption. Meanwhile, we consider the acquisition of the East Africa business without additional equity financing to be a positive factor in terms of potential EPS and ROE improvement. Since we expect to continue generating cash flows going forward, we also plan to proceed with share buybacks as scheduled. Ultimately, the most important thing is to steadily accumulate profits and recapture lost ground. Increasing ROE will prove a challenge due to the weak Japanese yen, but we will be expected to offset any dampener that might put on profits by further enhancing the profitability of our global operations. It is a challenging situation, but it does not mean that we need to consider reviewing the key indicator guidelines through 2030.

A.Cost increases resulting from the situation in the Middle East are expected to reach a total of roughly JPY 15 billion in 2026. In the first half, those costs totaled over JPY 3 billion, and we expect a further total increase of just over JPY 11 billion in the second half. We anticipate we will be able to absorb the additional just over JPY 6 billion cost increase in Japan. We will also aim to absorb as much of the approximately JPY 5 billion cost increase from Europe and Asia Pacific as possible.
Looking ahead to 2027, we have already been hedging commodities, and the impact of current high price levels is expected to linger in some areas. We also anticipate an impact from costs that we cannot hedge against, such as fuel, distribution costs, and supplier conversion costs. In 2026, costs will remain high due to the approximate JPY 27 billion in regular cost increases and the additional impact from the situation in the Middle East. However, we have assumed that costs are on a continuous rising trend, so we are formulating plans for 2027 and beyond without assuming that costs are likely to fall compared to 2026.

A.We are progressing two main initiatives. The first involves generating greater procurement cost efficiencies throughout the Group. We planned to generate efficiency benefits of over USD 100 million in 2026, and we generated just over 40% of that total in the first half of the year.
The second main initiative focuses on earnings structure reforms being promoted at each regional headquarters, with efficiency benefits from those reforms expected to total approximately EUR 25 million in the first half and EUR 50 million in 2026 in Europe, and AUD 15 million in the first half and AUD 25 million in 2026 in Asia Pacific. In Japan, it is difficult to extrapolate the benefits achieved through earnings structure reforms in isolation, but fixed costs improved by approximately JPY 3 billion year on year in the first half of 2026. However, that figure does include a reallocation of approximately JPY 3.5 billion in alcohol beverages advertising and promotion expenses to the second half of the year, so not all of the fixed cost improvement is due to structural reforms. We intend to use the system disruption experience to promote further structural reforms such as brand selection and concentration, and we expect these initiatives will continue to generate positive effects in 2027 and beyond.

A.Our external environment will likely remain challenging going forward and we will be expected to manage operations in Europe and Oceania based on the assumption that beer sales volumes will not increase. Against that backdrop, if we want to prevent downtrading, it is crucial that we do everything we can as a consumer goods manufacturer to create products that deliver greater value and create new consumption occasions for those products.
Having said that, such efforts alone will not be enough to dispel all uncertainty, so we will seek to improve profitability through value engineering and the integration of departmental functions. At the same time, we will maintain our strong position in beer and invest management resources and steer talent into the development of BAC and other growth categories.

A.In Europe, we have increased prices by a cumulative 50% or more in markets like Poland, Romania, and Hungary due to cost increases following the invasion of Ukraine. While it would be possible to revise prices in line with CPI, we do not think it would be easy to significantly increase prices beyond that level. Price levels in Oceania are also high, making it difficult to revise prices to the same degree as we have in the past. In Japan, we need to keep an eye on the future market environment, but current market circumstances are now suitable for implementing necessary price increases.

A.We still have to complete some approval processes before the closing, but we do not consider them to be a major obstacle. We have not changed our outlook regarding the acquisition closing in the second half of 2026. Our request to be exempted from making a mandatory takeover offer to existing EABL minority shareholders has been accepted, and we have no plans to acquire more than a 65% shareholding.

A.China was a key driver of sales volume growth in the first half of 2026 but sales also increased in South Korea, the United Kingdom, and the United States, resulting in a 31% year-on-year increase in total sales volumes. Our brand investments and promotional initiatives in individual markets, as well as our sponsorship activities with the City Football Group and the Rugby World Cup are delivering clear results and Asahi Super Dry sales growth is accelerating. The communication of consistent global messages has also helped build an image for Asahi Super Dry as a high-end, stylish, unique, high-quality brand from Japan. Regarding product contributions, the markets where we have already achieved high profitability are now at a stage where any expansion in sales will contribute to profit. However, the stage of growth differs in different markets, so rather than focusing solely on pursuing short-term profits in each market, we aim to build the global scale of Asahi Super Dry operations and generate medium- to long-term profit contributions.

A.BAC sales volumes across global markets are expected to generate mid-single-digit average annual growth through 2030, and we will focus on capturing volumes in areas with relatively high growth potential such as non-alcohol adult beverages (beer taste) and adult soft drinks. In the first half of 2026, BAC sales volumes declined by 1% year on year due primarily to the lingering impact of the system disruption in Japan. However, in the second quarter from April through June, BAC sales volumes regained a firm growth trajectory after generating 10% year-on-year growth in Japan and 6% growth on a global level.
Going forward, rather than chasing sales volume, we will focus on developing high value-added premium areas such as our Mirai no Lemon Sour brand range. We also intend to accelerate horizontal BAC growth across the Group by sharing R&D, branding, and other capabilities across regions and expanding individual regional brands across other markets, starting with the expansion of the ZEITAKU SHIBORI brand into the United States, Australia, and New Zealand.

A.The Japan food business is tracking above plan, and even though some challenges remain, the Japan alcohol beverages business is also looking like it will achieve the full-year plan. However, the situation for the Japan non-alcohol beverages business is a challenging one, with sales proving slow to recover and costs being inflated by the situation in the Middle East.
First, it is important to encourage topline growth. In the Japan alcohol beverages business, we will strengthen the beer category centered on the refresh of the Asahi Super Dry brand lineup, and in the food business, we will propel the development of new products. On top of that, we will strive to offset the shortfall in the Japan non-alcohol beverages business with strong performances from China and other parts of East Asia and the Japan food business. We will also control costs at Asahi Group Japan, Ltd. regional headquarters and mount offensive strategies to counter the Middle East situation impact and help achieve the full-year plan.

A.It is not just about controlling costs. We will continue to invest properly in areas where that investment is expected to generate positive outcomes. We have enhanced some advertising and promotion investments in anticipation of the liquor tax revisions in October, and going forward, we intend to control those costs to bring them in line with appropriate levels.
In 2027, we do not have any major concerns regarding profits in the Japan alcohol beverages business, and we think it is possible to generate a level of profit that exceeds that achieved in 2024. However, in view of the outstanding challenges in the Japan non-alcohol beverages business, we will work to generate a recovery in topline performance and improve profitability from a cost perspective as well.

A.We expect the revival of beer demand will continue based on sales trends in the broader market and for the Asahi Group Holdings to date. We are sticking fast to our policy of channeling the management resources allocated to the beer category primarily into Asahi Super Dry. Regarding RTDs, we will expand sales of sugar-free products and premium segments, and develop strategies with a focus on added value and profitability.

A.The market environment remains challenging and the impact of cost increases caused by the Middle East situation remains a risk, but at this point, we have not made any changes to our full-year plan. While conditions in Poland and Romania are particularly tough, markets such as the Czech Republic, Italy, and the United Kingdom are performing strongly. Structural factors are partly to blame for the weakness in Poland and Romania environments, but we think cyclical factors play a considerable part here. In this kind of situation, rather than drastically cutting advertising and promotion expenses to generate short-term profits, we will continue to make necessary brand investments so we will be ready to capture growth when the market environment improves. We are starting to see signs of an improvement in market share due to these initiatives, and we will continue to support performance in the more robust markets while also aiming to achieve our full-year plan.

A.The macroeconomic downturn in Australia is impacting consumption, but we believe that the worst period is nearly over. With inflationary pressures settling down and speculation surrounding additional interest rate hikes receding, we are starting to see some signs of a recovery in personal consumption. However, gasoline prices remain high, so we have to keep a close eye on how that might impact consumer’s selective spending on products including alcohol beverages. Even in the current environment, our goal is to achieve the full-year plan by leveraging our Multi Beverage Strategy to complement progress in different categories.

A.Downtrading on beer in the Australian off-premise sector is the main cause. Demand is shifting to large quantity packs, increasing demand for lower-priced products. However, highly profitable on-premise sales have remained buoyant, so the on-premise/off-premise mix has not deteriorated significantly. We should not allow this downtrading trend to become the structural norm, and we will strive to improve product/price mixes as the macroeconomic environment recovers.