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  4. Main Q&As at FY2020 Financial Results briefing

Main Q&As at FY2020 Financial Results briefing

Asahi's aim is to recover to the 2019 profit level by 2022. What are the prospects for recovery in each of its domestic and overseas businesses?
With regard to the domestic alcoholic beverages business, Asahi is working on improving the mix and reforming the profit structure, in addition to focusing investment on the off-premise channel. However, it may take an additional year or so for its domestic business to recover to 2019 profit levels, mainly due to the slower recovery of the on-premise market compared to other countries.
The European business is expected to recover in 2022, and furthermore, the Oceania business will show a stronger recovery than other regions. Therefore, Asahi expects that there is a sufficient possibility that the total international business will exceed the 2019 level in 2022.
How will Asahi improve the profitability of its domestic alcoholic beverage business?
Asahi will work to revitalize the beer category by reinforcing new value propositions, such as the launch of Asahi Super Dry Nama Jokki Can, and will aim to grow marginal profit by developing high-value-added products such as global premium beer brands and RTDs. In addition to this, Asahi is promoting efficiency reforms such as profit structure reforms in the sales channel and hybridization by installing a new beverage PET bottle line at the brewery. Although it will take a certain period of time for the performance to recover, it will steadily proceed with the transformation from volume to value-oriented management.
In addition to the effect of improving the product mix through the recovery of the on-premise market, what other measures will Asahi take to achieve the plan for the current fiscal year in the European business?
As for sales revenue, in the off-premise channel, which is becoming increasingly premiumized, Asahi aims to recover sales volume and unit sales price by strengthening advertising and sales promotion of premium brands in addition to mainstream brands in which Asahi holds a solid position in each country. In the area of non-alcoholic beer, Asahi will leverage the high brand power it has cultivated to further strengthen its value proposition in response to changing consumer needs.
As for the profit, in addition to sales growth, Asahi will continue to improve production efficiency and optimize various costs, while also creating synergies through the organizational integration of its European business and Asahi International.
What are the assumptions for the 2021 plan of the Oceania business and what is Asahi's strategy for achieving the plan?
Although the degree of recovery in the off-premise market varies from state to state, the overall market is on a steady recovery trend in line with deregulation. In 2021, it is expected to recover to about -10% of the 2019 level, including sales synergies from the strong sales network of the CUB business. The off-premise market is expected to decline slightly from the previous year due to factors such as a reaction to the impact of COVID-19, but Asahi will strengthen its response to growing demand for bulk purchases, particularly for its mainstay brands, and will work to enhance the value of its brands in the premium beer, craft beer, and contemporary beer categories. In addition, Asahi will further expand into new categories such as non-alcoholic beer in addition to RTD by leveraging its strong business base. As for the profit, Asahi will create cost synergies through organizational integration of CUB and existing businesses to raise the overall level of profit.
Given Asahi's plan to generate 200 billion yen in free cash flow annually, what is the direction of investment, including capital investment, in the future?
Capital investment is expected to remain at the same level as the 2021 plan. In addition to this, Asahi will step up investments related to digital transformation and research and development in order to achieve future growth for the entire group. Until that Net Debt/EBITDA is about 3x, Asahi will use the cash, excluding these investments and dividends, to repay interest-bearing debt on a priority basis.
Asahi's policy for returning profits to shareholders is to “stably increase dividends.” What should investors think about the number of dividends if they are affected by exchange rates? What is Asahi's current position on share buybacks?
Asahi would like to aim for a stable increase in dividends on a Japanese yen basis.
As for share buybacks, its current policy is to prioritize the allocation of cash to repay interest-bearing debt in order to return Net Debt/EBITDA to a level of about 3x by the end of 2024.
What is the management strategy after the COVID-19 is under control?
Asahi will reinforce investments in R&D and human resources, digital transformation, and other investments that will lead to the advancement of operations, and strengthen its management base to achieve sustainable growth. In addition to appointing a new head of IT & Transformation at its Holdings, it has established a Value Creation Office within the Japan Regional Headquarters to speed up marketing and product development to create new value. Sustainability is becoming increasingly important in society, and Asahi will incorporate it into its management strategy and take responsibility for its efforts.