Sapporo Holdings Limited
Annual Financial Results Briefing for Fiscal Year 2025 February 13, 2026
Event Summary
[Company Name] Sapporo Holdings Limited
[Company ID] 2501
[Event Language] JPN
[Event Type] Earnings Announcement
[Event Name] Annual Financial Results Briefing for Fiscal Year 2025
[Fiscal Period] FY2025 Annual
[Date] February 13, 2026
[Number of Pages] 24
[Time] 17:00 – 18:16
(Total: 76 minutes, Presentation: 46 minutes, Q&A: 30 minutes)
[Venue] Webcast
[Number of Speakers] 3
Hiroshi Tokimatsu President and Representative Director Yoshitada Matsude Executive Managing Director
Rieko Shofu Executive Managing Director
Presentation
Tokimatsu:
An overview of the full-year financial results for fiscal year 2025 is as follows. Core operating profit was JPY25 billion, an increase of JPY8.2 billion year on year. Profit attributable to owners of parent was JPY19.5 billion, an increase of JPY11.8 billion year on year.
As a result, ROE increased significantly to 9.4% from 4.1% in the previous year, greatly exceeding the 8% target set in the current medium-term management plan.
Regarding core operating profit, profitability improved across all businesses, particularly in domestic alcoholic beverages, resulting in profit growth in all segments. Reflecting the increase in core operating profit, profit attributable to owners of parent also increased significantly.
Following the adoption of IFRS, all figures reached record highs. In particular, ROE achieved the 8% target set for fiscal year 2026, the final year of the medium-term plan, one year ahead of schedule in fiscal year 2025.
Regarding the management plan for fiscal year 2026, core operating profit is expected to be JPY22 billion, representing a year-on-year decline of JPY3 billion. Profit attributable to owners of parent is projected to be JPY296 billion, assuming the injection of external capital into the real estate business is executed on June 1, which would represent a significant increase year on year. Due to the temporary cash inflow associated with this transaction, ROE is expected to be temporarily elevated to 83.4%.
I will explain the factors behind the expected JPY3 billion decline in core operating profit. First, although the medium-term plan targets were achieved in fiscal 2025, we plan to incur certain costs for remaining structural reforms and to secure the sustainability of our business. Second, we anticipate strengthening marketing for beer products in anticipation of the liquor tax revision.
However, when looking solely at the domestic alcoholic beverages business, even after factoring in increased investments and other elements, core operating profit is expected to remain roughly flat.
The Company plans to transition to an operating holding company structure on July 1 this year. The next medium-term management plan will cover FY2027 through FY2030, and FY2026 will be positioned as a transition year toward the next plan. We intend to steadily implement the necessary structural reforms and allocate the cash generated from the injection of external capital into the real estate business to growth investments, debt reduction, and shareholder returns.
We will provide a review of the current medium-term management plan and details of the next plan at a later date, but I would like to supplement information regarding shareholder returns. The dividends for fiscal year 2025 have been set at 18 yen on a post-stock split basis, in line with our policy of maintaining a DOE of 3% or higher. Furthermore, we are aiming for a DOE of 4% or higher by fiscal year 2030, and the dividend forecast for fiscal year 2026 is planned to be a significant increase to 40 yen. In addition, we have decided to implement interim dividends, which we have not done previously. Toward 2030, we will continue to focus on shareholder returns, including share buybacks.
Shofu:
Although the current medium-term management plan started in 2023, core operating profit has grown threefold compared with fiscal year 2022, before the plan began. ROE, one of our financial targets, also exceeded the 8% target set for the final year of the plan.
Let me provide some additional context on the two core operating profit figures shown in the graph on the left. Following the announcement at the end of last year regarding the injection of external capital into the real estate business, the real estate business has been classified as a discontinued operation. Consolidated core operating profit excluding the portion attributable to the real estate business subject to this transaction was JPY25.0 billion, while core operating profit without classifying the real estate business as a discontinued operation was JPY32.1 billion.
We set a target of approximately 10% for EBITDA CAGR, and the results significantly exceeded this target. On the other hand, while we also targeted approximately 10% CAGR in overseas revenue, the actual result was 6.3%, indicating that challenges remain.
Overall, our medium-term initiatives have focused on improving capital efficiency and moving away from a low-profit structure. We believe we significantly strengthened our earnings power in the domestic business, particularly in domestic alcoholic beverages.
Balance sheet reform was also a key theme. With regard to the reduction of cross-shareholdings, we progressed at a pace exceeding the initial plan, reducing the ratio to equity to 14% by the end of fiscal year 2025. Although equity will fluctuate significantly in 2026 due to the injection of external capital into the real estate business, based on progress to date, we expect the ratio to equity to reach 10%.
While non-financial items are not included in the materials, reductions in GHG emissions and improvements in the ratio of female directors and managers are both progressing steadily, and we expect to achieve our fiscal year 2026 targets.
In 2024, during the period covered by the medium-term plan, we announced our medium- to long-term management policy, significantly reshaping our portfolio and outlining a growth strategy centered on alcoholic beverages, where we have competitive strengths. In line with this policy, we decided to inject external capital into our real estate business, which we disclosed in December last year.
Next, we will review the core operating profit margins of each business segment.
Domestic alcoholic beverages have been the driving force of our group, with the core operating profit margin rising sharply from 3.5% in 2022 to 9% in 2025. Overseas alcoholic beverages, however, continued to face significant challenges. In particular, structural difficulties in North America resulted in performance falling well short of the targets set when the medium-term management plan was formulated.
Meanwhile, core operating profit margins improved in the Restaurants, Domestic Food & Beverages, and Overseas Beverages segments. In particular, in Restaurants and Domestic Food & Beverages, we reviewed their positioning in our portfolio as businesses undergoing structural reforms and proceeded with the sale of certain assets and businesses. In Domestic Food & Beverages, we have also delivered steady growth in lemons, one of our key strengths.
Next, I will explain the recent initiatives and future outlook for our core domestic and overseas alcoholic beverages businesses.
In domestic alcoholic beverages, we outperformed the market in beer and expanded sales volume. In particular, by promoting the brand’s worldview and experiences, Black Label cans delivered 7% growth year on year, steadily strengthening their presence.
The share of beer within beer-type beverages also improved from 68% in 2022 to 81% in 2025. This improvement in product mix contributed to higher profitability.
In addition to beer growth, we have also been optimizing our production footprint to strengthen earnings. We converted the Sendai Beer Plant into an RTD production facility, sold the Nasu plant, and withdrew from domestic wine. These initiatives are also part of our efforts to enhance earnings power.
With liquor tax revision scheduled for October this year, we will continue to strengthen our domestic alcoholic beverages business.
We will now explain the future outlook for our domestic alcoholic beverages business.
Toward 2030, we aim to achieve a core operating profit margin of 10% or higher in this segment. Beer will remain a key driver of profit growth. Based on our “Bonds with Community” concept, we will strengthen a wide range of consumer touchpoints through enhanced brand experiences and community building. We also plan to further develop initiatives to monetize these touchpoints going forward.
RTD and non-alcoholic beverages will also serve as growth and profit drivers. Over the long term, the domestic beer market is expected to gradually decline, while the RTD and non-alcoholic markets are expected to expand. We recognize that our RTD and non-alcoholic portfolio is not yet as strong as that of some competitors. We will therefore proactively allocate resources to build these categories into the next pillars of growth, as we formulate our next medium-term management plan.
We also aim to increase the beer mix to over 90% by 2030 and will continue to pursue further margin improvement initiatives. At the same time, we will continue strengthening our core brands, targeting volume growth of more than 20% versus fiscal year 2025 for the Black Label and Yebisu brands.
As for overseas alcoholic beverages, significant challenges remain.
Regarding the growth of the Sapporo brand overseas, we had set a medium-term plan target of 10 million cases in sales, which we achieved one year ahead of schedule in fiscal year 2025.
On the other hand, brands other than the Sapporo brand, such as Sleeman in Canada and Stone in the United States, saw sales decline. The underperformance of these non-Sapporo brands, particularly Sleeman and Stone, had a significant negative impact on the earnings structure of our operations in Canada and the United States.
The key factors behind this underperformance were a greater-than-expected slowdown in the U.S. craft beer market, the overall decline of the Canadian beer market, and tariff-related cost increases. In particular, higher costs for can materials-such as aluminum and steel-were a major driver of cost inflation.
While the Sapporo brand continued to grow, we expect structural challenges in the United States and Canada to persist for some time. Accordingly, we are implementing additional structural reforms in both countries and will work to accelerate the turnaround of our North American business.
Strengthening our overseas governance and management capabilities was also identified as a key challenge. We have been managing overseas operations with a management structure different from that of our domestic business, and we established an International Management Committee in January last year.
As a result, we believe that transparency in management accounting and the profit structure has improved, and planning for reforms in close collaboration with local teams has begun to progress. Going forward, we will further strengthen our organizational structure, including our overseas beverage business.
The targets set in the current medium-term management plan were largely achieved ahead of schedule. In addition, during the plan period, we announced our medium- to long-term management policy and made the decision to significantly reshape our business portfolio by focusing resources on businesses where we have competitive strengths. We have now begun implementing initiatives in line with our disclosed medium- to long-term growth strategy.
Accordingly, the current medium-term management plan will come to an end in fiscal year 2025, and fiscal year 2026 will be positioned as a transition year, reflecting significant changes in equity associated with the injection of external capital into the real estate business, as well as the expected occurrence of one-time expenses. The next medium-term management plan will cover the four-year period from fiscal year 2027 to fiscal year 2030, and we plan to announce the details at an appropriate time later this fiscal year..
The foundation for our next medium-term management plan is the medium- to long-term management policy announced in February 2024.
First, we plan to transition from our current pure holding company structure to an operating holding company structure starting in July this year. By more closely integrating group functions and businesses, we aim to build an organizational structure that can generate synergies more efficiently.
Within this framework, we will manage our businesses along two key strategic pillars-“Bonds with Community” and “Healthier Choice”-in line with our medium- to long-term policy and in anticipation of future market changes, as shown in the bubble chart.
With respect to growth investments, we will pursue opportunities across regions and through both organic and inorganic means. While continuing to strengthen domestic beer, we also aim to expand our overseas beer business while managing country-specific portfolio risks.
In addition, both domestically and internationally, RTD and non-alcoholic beverages will be priority categories for resource allocation.
While ROE may fluctuate temporarily in the short term, we are formulating the next medium-term management plan with the goal of delivering ROE of 10% or higher over the medium to long term.
Matsude:
Let me begin by explaining our medium- to long-term financial scenario.
The key point of this medium- to long-term financial scenario is how we will allocate the cash obtained from the injection of external capital into real estate.
We assume the scale of this cash to be JPY470 billion. We plan to allocate JPY300-400 billion to growth investments and JPY100 billion to shareholder returns, including raising dividend levels and flexible share buybacks. Through this, we aim to achieve ROE of 10% or higher over the long term.
ROE was 9.4% in FY2025. In FY2026, due to the recognition of a significant gain from the injection of external capital into real estate, ROE is expected to be 83.4%. Thereafter, as equity more than doubles, ROE is expected to decline temporarily. However, through strategic investments in the alcoholic beverages business to drive profit growth, we aim to restore ROE to 8% or higher by FY2030 and to 10% or higher over the long term.
Note that core operating profit for FY2026 is planned at JPY22 billion, a year-on-year decline. This reflects a temporary decrease as we proactively invest to strengthen the foundation for future growth. We expect an early recovery from FY2027 onward.
Next, I would like to provide additional details on our cash allocation policy for the proceeds from the injection of external capital into real estate.
Our basic approach is to prioritize investments in our growth strategy while also considering the balance sheet we aim to achieve over the medium to long term.
With respect to growth investments, we plan to allocate capital to both domestic and overseas investments, including organic and inorganic opportunities. In making investment decisions, we will use hurdle rates set by business and region. As examples, we have set hurdle rates at 7% for Japan alcoholic beverages and 10% for North American alcoholic beverages, based on WACC plus a spread. If we are unable to identify attractive investment opportunities by FY2030, we will consider additional shareholder returns.
Turning to debt, we will first repay debt related to the real estate business. If cash remains in excess after that, we will use it to repay other outstanding debt. At the same time, over the medium to long term, we intend to make use of financial leverage. As benchmarks for financial soundness, we plan to manage our leverage within a net D/E ratio of 0.5x or below and a net debt/EBITDA multiple of 3.0x or below.
With respect to shareholder returns, in addition to enhancing dividends, we will also consider share buybacks. We plan to provide more specific guidance on share buybacks after the first closing, which is scheduled for June 1.
Next, I will explain our management and governance framework to drive these growth investments.
We have strengthened both our executive and board structures to date, and we will further reinforce them as we pursue our growth strategy.
First, with respect to the Board, our approach is to enhance expertise aligned with our future strategy, with a focus on global management, M&A, business turnaround, and B2C marketing. We plan to nominate new outside director candidates with these capabilities. (Please refer to Appendix p.45 for details.)
In terms of governance enhancement, an outside director with financial and accounting expertise is expected to assume the role of Chair of the Audit and Supervisory Committee, which has previously been held by an internal director.
Regarding the investment review and approval process, we intend to ensure sufficient time and rigor in reviewing both qualitative and quantitative aspects, in order to strengthen the effectiveness of investment decision-making and the Board’s oversight.
Turning to the executive structure, we plan to transition to an operating holding company structure in July this year. By strengthening execution both domestically and overseas, and improving the speed and quality of information flow to the Board, we will further enhance our decision-making processes.
Finally, with respect to M&A, we have received feedback from the capital markets that our track record has not been satisfactory. We intend to address this issue directly by establishing a dedicated organization specializing in M&A and alliances, and by recruiting highly specialized external talent to strengthen our capabilities.
Finally, I would like to provide additional details on the real estate external capital injection transaction structure.
First, regarding the scale of the transaction, the corporate value is JPY477 billion, as previously disclosed. We plan to conduct the first closing in June 2026. In connection with this, we expect to recognize a gain on the loss of control of a subsidiary of JPY330 billion, which is equivalent to approximately JPY290 billion after tax.
Cumulative cash proceeds through FY2029 are expected to total JPY470 billion, unchanged from our previous disclosure.
To ensure a smooth separation and phased cash realization, the transaction will be executed in stages. We have confirmed that there is no discount attributable to the staged nature of the transaction (i.e., no “step discount”).
With respect to the real estate assets included in the transaction, we have decided to retain certain assets currently held by Sapporo Real Estate Co., Ltd. within the Sapporo Group. These include a 30% interest in Yebisu Garden Place (YGP), a portion of Sapporo Garden Park, and Ginza Place. We will continue to leverage these assets as brand communication hubs and venues for brand experiences, contributing to the growth of our alcoholic beverages business.
We will monitor their contribution by comparing market ROIC with WACC. In addition, for a 20% portion of the 30% interest in YGP, as well as Ginza Place, we will also consider potential monetization in the future, depending on the growth stage of the alcoholic beverages business.
Next, let me provide an overview of our full-year financial results for FY2025.
Core operating profit, operating profit, and profit attributable to owners of parent all increased significantly year on year. These results also exceeded the revised plan we disclosed in December. Profit at each level reached record highs.
Next, I will walk you through the factors behind the year-on-year change in revenue.
In Japan alcoholic beverages, revenue increased, driven by a 3% increase from higher beer volume and an 8% increase from higher RTD volume, as well as the contribution from price revisions.
In overseas alcoholic beverages, Sapporo Premium Beer (SPB) volume increased by 5%; however, revenue declined due to a 9% decrease in Overseas brands amid weaker market conditions, as well as the impact of foreign exchange.
In Japan Food & Beverages, we continued structural reforms. Revenue decreased by JPY9.8 billion due to the impact from the business transfer of Shinsyu-ichi Miso Co., Ltd., resulting in an overall 1% decline year on year.
Next, I will explain the year-on-year factors behind the change in core operating profit.
Core operating profit increased significantly, led by Japan alcoholic beverages. In FY2025, we benefited from price revisions, while also stepping up brand investments to strengthen our beer business.
In Japan Food & Beverages, revenue declined; however, core operating profit increased, reflecting the benefits of structural reforms. Other segments were broadly flat year on year.
Next, let me update you on our balance sheet.
We continued to reduce strategic shareholdings. In FY2025, we sold JPY9.1 billion of such holdings, reducing the ratio to equity to 14%.
Going forward, we target reducing this ratio to below 10% based on the current level of equity, and to below 5% based on the higher equity level expected following the injection of external capital into real estate. For FY2026, we plan to sell more than JPY8.0 billion.
AloJapan.com