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Home > Investor Relations > Online Graph > Financial Data Q&A (Balance Sheet Information)

Financial Data Q&A

Balance Sheet Information

Financial Data Q&A (Balance Sheet Information) Between 2004 and 2010, why was the Sapporo Group able to reduce debt while improving the debt/equity ratio? Why did the equity ratio increase up to 2010? Why has debt been increasing and the equity ratio decreasing since 2010? Why did financial liabilities go up starting in 2010 and increased in 2011 and 2012 also causing the company's equity ratio to decline?

1. Between 2004 and 2010, why was the Sapporo Group able to reduce debt while improving the debt/equity ratio?

  • The Sapporo Group switched to the pure holding company structure in 2003. The first three years after this switch were positioned as a period of rebirth. Priority was placed on reducing debt and the three-year target was achieved after only two years. The goals of the next plan, starting in 2006, were to move quickly to enact structural reforms and improve profitability as well as to maintain the proper balance between strengthening strategic investments and maintaining financial soundness.
  • Strategic initiatives based on this plan produced more improvements in financial soundness. The result is a virtuous cycle that allows operating in a manner that leads to long-term growth. The group’s earnings increase, debt decreases, net assets increase along with growth in retained earnings, and investments can be made to generate growth in the future. Between 2002 and 2010, debt fell by more than half and the debt/equity ratio improved significantly from 3.4%to 1.4%.

2. Why did the equity ratio increase up to 2010?

  • Total assets decreased because higher earnings made it possible to reduce debt. At the same time, growth in earnings caused retained earnings to climb. The result was an increase in the equity ratio. Between 2002 and 2010, financial soundness improved as the equity ratio increased from 14.8% to 25.3%.

3. Why did financial liabilities go up starting in 2010 and increased in 2011 and 2012 also causing the company's equity ratio to decline?

  • Due to the improvement in financial soundness, the Sapporo Group was finally able to start implementing a growth strategy in 2010. As part of this strategy, we increased the pace of forming strategic alliances and growing outside Japan. In 2011, there was an additional purchase of stock associated with the management integration with POKKA CORPORATION, a purchase of stock associated with the purchase of a Sapporo Beverage convertible bond, and capital expenditures, mainly to construct the Long An Brewery of Sapporo Vietnam. Debt increased in 2011 to provide funds for strategic investments aimed at generating growth in the future.
  • We have positioned 2012 and 2013 as a period for starting to build a new group management framework for achieving rapid growth. There are three priorities: Challenge toward growth in all businesses; Carrying out growth measures; Creating new opportunities for growth. To achieve our long-term goals, we are managing operations prudently while adopting an offensive stance for becoming more competitive. Initiatives include an extensive reexamination of how we allocate resources and making strategic investments. In 2012, we acquired Silver Springs Citrus and M’s Beverage. We also made Yebisu Garden Place wholly owned by purchasing 15% of the trust beneficiary rights. Therefore, just as in 2011, we made a number of investments in 2012 for future growth.
  • Strategic investments between 2012 and 2016, including ordinary capital expenditures are expected to be approximately ¥150 billion to ¥200 billion. Since this does not exceed our expected operating cash flows during this period, we plan to hold debt steady at the 2011 level. At the same time, we plan to improve the debt/equity ratio by adding to internally retained funds.