[PPT] - 2003 Results and Results and 2003 2003 Results and Medium- -Term PowerPoint Presentation

SLIDE 1

2003 Results and Medium-Term Management Plan 2003 2003 Results and Results and Medium Medium-

Term Management Plan

Term Management Plan

February 24, 2004 Asahi Breweries, Ltd. URL http://www.asahibeer.co.jp

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2003 2003 Results Overview (consolidated) Results Overview (consolidated) ……………………………… ……………………………….. .. Results Overview (non Results Overview (non-

consolidated)

consolidated)…………… ……………. .… ….. ..………… ………… Group Management Overview Group Management Overview…………………………… …………………………….. .. Background to the Second Medium Background to the Second Medium-

Term Management Plan

Term Management Plan……… ……… Medium Medium-

Term Vision and Business Strategies

Term Vision and Business Strategies……………………… ………………………. . Business Structure Transformation Business Structure Transformation………………………………… …………………………………... ... Numerical Targets Numerical Targets …………………………………………………… …………………………………………………….. .. Sales Guidelines by Business Segment Sales Guidelines by Business Segment…………………… ……………………. . Operating Income Guidelines by Business Segmen Operating Income Guidelines by Business Segment t…… ……... ... Alcoholic Beverages Business: Market Forecasts Alcoholic Beverages Business: Market Forecasts…………………… ……………………. . Beer/ Beer/Happoshu Happoshu Strategies Strategies………………………………… ………………………………… Other Alcohol Categories Strategies Other Alcohol Categories Strategies…………………… …………………….. .. Strengthening Cost Competitiveness Strengthening Cost Competitiveness…………………… …………………….. .. Measures to Enhance Competitiveness Measures to Enhance Competitiveness………………… ………………….. .. Core Businesses: Strengthening Existing Businesses and Investmen Core Businesses: Strengthening Existing Businesses and Investment t Financial Position Improvements and Cash Flow Strategies Financial Position Improvements and Cash Flow Strategies……… ……….. .. Organizational Reform and Harmony with Society Organizational Reform and Harmony with Society………………… …………………. . 2004: Group Strategies and Performance Forecasts (consolidated) 2004: Group Strategies and Performance Forecasts (consolidated).... .... Alcoholic Beverages Strategies and Forecasts (non Alcoholic Beverages Strategies and Forecasts (non-

consolidated)

consolidated)… … Beer/ Beer/Happoshu Happoshu: 2003 Overview : 2003 Overview……………………………………… ……………………………………….. .. 2004 Sales Plan and Initiatives 2004 Sales Plan and Initiatives…………………… …………………….. .. Alcohol Product Diversification: 2003 Overview Alcohol Product Diversification: 2003 Overview…………………… ……………………... ... 2004 Sales Plan and Initiatives 2004 Sales Plan and Initiatives…… ……. .………………… ………………… Alcohol Business: Advertising and Promotion Expense Estimates Alcohol Business: Advertising and Promotion Expense Estimates… ….. .. 2003 2003 Results and Overview Results and Overview The Second Medium The Second Medium-

Term

Term Group Management Plan Group Management Plan 2004 2004 Performance Forecasts Performance Forecasts and Business Strategies and Business Strategies 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24

Contents Contents

SLIDE 3

2003 2003 Results and Overview Results and Overview

SLIDE 4

2003 2003 Results Overview (consolidated) Results Overview (consolidated)

■ ■ 2003 2003 Results (consolidated) Results (consolidated)

Both sales and earnings rose year on year, and exceeded plan targets
Net income reached new record high for the third consecutive year
Both sales and earnings rose year on year, and exceeded plan targets
Net income reached new record high for the third consecutive year

1

(Billions of yen)

2003 2002 Plan

Asahi Breweries 1,107.0 1,093.8 13.2

(1.2%)

1,100.0 7.0

(0.6%)

Asahi Soft Drinks 189.4 177.6 11.8

(6.6%)

188.0 1.4

(0.7%)

Asahi Food & Healthcare 22.0 14.8 7.2

(49.0%)

22.5

0.5

(-2.2%)

Others 81.9 89.1

7.2

(-8.1%)

79.5 2.4

(3.0%)

Net Sales 1,400.3 1,375.3 25.0

(1.8%)

1,390.0 10.3

(0.7%)

Asahi Breweries 72.4 69.8 2.6

(3.7%)

63.0 9.4

(14.9%)

Asahi Soft Drinks 2.8

3.8

6.6

2.3

0.5

(21.7%)

Asahi Food & Healthcare 0.0 0.0 0.0

(0.0%)

0.1

0.1
Others

3.7 3.3 0.4

(12.1%)

0.6 3.1

(516.7%)

Operating Income 78.9 69.3 9.6

(13.9%)

66.0 12.9

(19.5%)

Non-operating income

r expense
8.5
11.8

3.3

6.0
2.5
Ordinary Income

70.4 57.5 12.9

(22.5%)

60.0 10.4

(17.3%)

Extraordinary gains/losses

21.8
25.1

3.3

20.6
1.2
Net Income

23.2 14.7 8.5

(57.3%)

21.0 2.2

(10.5%) Note: Asahi Food & Healthcare 2002 figures are the total of Asahi Beer Food and Asahi Beer Pharmaceutical YoY (%) Against Plan (%) 2003 Plan (8/7) 2003 Results

SLIDE 5

■ ■ 2003 2003 Results (non Results (non-

consolidated)

consolidated)

Gain in income from other alcoholic beverages covered the decline in

beer/happoshu income, allowing for an overall rise

Greater income and streamlining resulted in year-on-year increases and

performance that exceeded plan targets

Gain in income from other alcoholic beverages covered the decline in

beer/happoshu income, allowing for an overall rise

Greater income and streamlining resulted in year-on-year increases and

performance that exceeded plan targets

2003 2003 Results Overview (non Results Overview (non-

consolidated)

consolidated)

2

(Billions of yen) 2003 2002 Plan

Beer 784.4 849.6

65.2

(-7.7%)

776.5 7.9

(1.0%)

Happoshu 195.6 162.4 33.2

(20.4%)

194.7 0.9

(0.5%)

Other 127.0 81.8 45.2

(55.3%)

128.8

1.8

(-1.4%)

Net Sales 1,107.0 1,093.8 13.2

(1.2%)

1100.0 7.0

(0.6%)

Cost of sales 804.3 799.3 5.0

(0.6%)

Gross Margin on Sales

302.7 294.5 8.2

(2.8%)

SG&A

230.3 224.7 5.6

(2.5%)

Operating Income

72.4 69.8 2.6

(3.7%)

63.0 9.4

(14.9%)

Non-operating income

r expense
9.6
13.1

3.5

Ordinary Income

62.8 56.7 6.1

(10.8%)

57.0 5.8

(10.2%)

Extraordinary gains/losses

18.8
29.9

11.1

Net Income

16.4 10.6 5.8

(55.0%)

15.0 1.4

(9.3%) YoY Change (%) Against Plan (%) 2003 Results 2003 Plan (8/7)

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◆ Business base expanded to improve Group competitiveness

Alcoholic Beverages Business

(1) Asahi’s position in the beer/happoshu market was improved by reinforcing existing brands and the popularity of new products (2) Other alcohol products posted greater sales and improved profitability due to integration, including M&A activity

Soft Drinks Business: Rapid recovery due to a turnaround and growth in sales, as well as structural

reforms

◆ Cost competitiveness improved throughout the Group

Continuous cost reductions realized (Alcohol ¥10.8 bil.; Soft Drinks ¥3.5 bil.)

◆ Financial position and capital efficiency improved

Financial and business restructuring allowed us to achieve a record level of net income
Reductions in liabilities (-¥65.9 bil.) improved the debt/equity ratio, and share buyback (¥8.6 bil)

acquired

◆ ◆ The Second Medium The Second Medium-

Term Group Management Plan was formulated

Term Group Management Plan was formulated ■ ■ 2003 2003 Group Management Overview Group Management Overview

Group Management Overview (2003) Group Management Overview (2003)

3

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■ ■ First Group Medium First Group Medium-

Term Management Plan

Term Management Plan 4

2001 2001 2002 2002 2003 2003 2004 2004 2000 2000

【1st Stage】 Management reforms and strengthening of foundations 【2nd Stage】 Improve Group competitiveness and grow as a Group

Financial restructuring

Become comprehensive alcoholic beverage producer

Become comprehensive alcoholic beverage producer Restructure Group businesses Restructure Group businesses Strengthen core businesses (soft drinks, food & Strengthen core businesses (soft drinks, food & pharma pharma, overseas) , overseas)

Nurture and grow new businesses Nurture and grow new businesses

Group management system/structure Corporate governance Pension accounting Cash flow strategies

Achieved Achieved Achieved Achieved Not Yet Achieved Not Yet Achieved ◆ ◆ Initiatives to further accelerate achievements Initiatives to further accelerate achievements ◆ ◆ Initiatives to quickly address outstanding issues Initiatives to quickly address outstanding issues ◆ ◆ New initiatives for a changing management/market environment New initiatives for a changing management/market environment

2004 2004 2005 2005 2006 2006

Establish of a new medium- term management plan, inclusive of 2004 Establish of a new medium Establish of a new medium-

term management plan,

term management plan, inclusive of 2004 inclusive of 2004

Background to the Second Medium Background to the Second Medium-

Term Group Management Plan

Term Group Management Plan

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The Second Group Medium The Second Group Medium-

Term Management Plan

Term Management Plan

2004 2004 -

2006

2006

Shifting to a New Business Structure in Pursuit of Profitable Growth

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For a new Asahi Beer Group with abundant growth potential, we will pursue: 1) Total customer satisfaction 2) Business structure transformations 3) A corporate culture that rewards innovation generating an energetic company with the will to meet any challenge ■ ■ Group Medium Group Medium-

Term Vision

Term Vision ■ ■ Group Medium Group Medium-

Term Business Strategies

Term Business Strategies

Alcoholic Alcoholic Beverages Beverages Soft Drinks Soft Drinks Food & Food & Pharma Pharma; ; Overseas Business Overseas Business Suppliers and Suppliers and Support Business Support Business

・Emphasize earnings, and concentrate management resources in growth fields ⇒ Increase sales, and achieve solid earnings growth ・Emphasize earnings, and concentrate management resources in growth fields ⇒ Increase sales, and achieve solid earnings growth ・Reform structure of Asahi Soft Drinks, realizing dramatic earnings improvement ・Reinforce business foundations and expand scope with M&A and alliances ・Reform structure of Asahi Soft Drinks, realizing dramatic earnings improvement ・Reinforce business foundations and expand scope with M&A and alliances ・Improve earnings structure of existing businesses ・Expand scale by pioneering new fields and markets for future rapid growth ・Improve earnings structure of existing businesses ・Expand scale by pioneering new fields and markets for future rapid growth ・Ensure competitiveness, and implement fundamental structural reforms to increase Group competitiveness ・Ensure competitiveness, and implement fundamental structural reforms to increase Group competitiveness Trust & Satisfaction Trust & Satisfaction Growth & Efficiency Growth & Efficiency Challenges & Creation Challenges & Creation 5

Medium Medium-

Term Vision and Business Strategies

Term Vision and Business Strategies

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Food & Pharmaceuticals Overseas Businesses

Improve earning capacity of existing businesses

Alcoholic Beverages

Secure position in a mature market and strengthen cost competitiveness

Soft drinks Business

Beer/happoshu Comprehensive alcoholic business Maintain stability and long term reliability of cash cow business Maintain stability and long term Maintain stability and long term reliability of cash cow business reliability of cash cow business

Improve financial position and capital efficiency Improve financial position and Improve financial position and capital efficiency capital efficiency

Asahi Soft Drinks growth strategies and further structural reforms

6

～～ Reforming the business and earnings structure to achieve profita Reforming the business and earnings structure to achieve profitable growth ble growth ～～ Aggressive business investment Aggressive business investment Aggressive business investment

Business Structure Transformation Business Structure Transformation

Achieves persistent sales and earnings growth, and Achieves persistent sales and earnings growth, and improves corporate value improves corporate value

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20

20 40 60 80 100 120 2000 2001 2002 2003 2004 (est) 2006 (est) 1,000 1,200 1,400 1,600 1,800

(Billions of yen) Net Sales Operating Income Consolidated Parent Parent Net Income Consolidated Consolidated Parent

■ ■ Consolidated Targets Consolidated Targets

＜Second Medium-Term Plan＞

■ ■ Past Performance and Plan Past Performance and Plan 7

( (Reference Indicators) Reference Indicators)

(Billions of yen)

2003 2006 Change Net Sales

1,400.3 1,660 19%

Operating Income

78.9 115 46%

Ordinary Income

70.4 110 56%

Net Income

23.2 50 116% 5.6%

apprx 7%

－ ROE

5.9%

ver 10%

－ Operating Income Ratio 2003 2006 Change Shareholders' Equity 398.1 450 51.9 Financial Liabilities 336.3 300

36.3

Capital Investment 38.1 38 － Depreciation 53.1 47 － Operating FCF 115.3 130 － FCF 75.0 100 －

*FCF = Operating CF - PPE expenditures

Numerical Targets Numerical Targets

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Beer/happoshu Other Alcohol Soft Drinks Food & Pharma Overseas Business Other

■ ■ Sales Guidelines by Segment Sales Guidelines by Segment

Alcoholic Beverages 79.0% Alcoholic Beverages 72.3%

■ ■ Sales Breakdown Sales Breakdown

2003 2003 Actual Actual 2006 2006 Plan Plan

8

(Billions of yen) 2003 2006 Change Alcoholic Beverages 1,107.0 1,200 93.0 Soft Drinks 189.4 300 110.6 Food & Pharma 22.0 50 28.0 Overseas Business 13.2 50 36.8 Other 68.7 60

8.7

Total

1,400.3 1,660 259.7

Beer/happoshu Other Alcohol Soft Drinks Food & Pharma Overseas Other

Sales Guidelines by Business Segment Sales Guidelines by Business Segment

Includes sales increase of

approx. ¥140 bil. from

entry into new businesses

SLIDE 13

Beer/happoshu Soft Drinks Food & Pharma Other Beer/happoshu Other Alcohol Soft Drinks Food & Pharma Overseas Other

■ ■ Operating Income Guidelines by Segment Operating Income Guidelines by Segment

Alcoholic Beverages 91.6% Alcoholic Beverages 78.3%

■ ■ Operating Income Breakdown Operating Income Breakdown

2003 2003 Actual Actual 2006 2006 Plan Plan

9

(Billions of yen)

2003 2006 Change Alcoholic Beverage

72.4 90 17.6

Soft Drinks

2.8 15 12.2

Food & Pharma

0.0 3 3.0

Overseas Businesses

1.5

2 3.5

Other

5.2 5

0.2

Operating Income Total

78.9 115 36.1

Operating Income Guidelines by Segment Operating Income Guidelines by Segment

Includes operating income increase of approx. ¥10 bil. from entry into new businesses

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2,000 4,000 6,000 8,000 10,000

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

10

(Thousands of kiloliters) Sake, others Whiskey and spirits Wine Shochu Liquors (includes low alcohol beverages) Other alcohol (includes happoshu) Beer

■ ■ Sales Volume Forecasts by Category Sales Volume Forecasts by Category

(Asahi estimates, taxation base) 【【Forecast Market Changes from 2003 Base Forecast Market Changes from 2003 Base】】

2004 (est.) 2006 (est.) Beer

approx -6% approx -11%

Happoshu

approx +6% approx +10%

Total

approx -1% approx -3%

Shochu

approx +4% approx +10%

Low alcohol beverages

approx +8% approx +23%

Whiskey & Spirits

approx -6% approx -12%

Wine

unchanged approx +7%

Alcoholic Beverages Business: Market Forecasts Alcoholic Beverages Business: Market Forecasts

(2003-2006 figures are Asahi forecasts)

◆ Overall market scale unchanged from 2003 ◆ Growth trends in happoshu, shochu and low-alcohol drinks categories unchanged

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【Goal】 Maintain stability and long term reliability

f cash cow business

【Basic Strategies】 ◆ ◆ Secure position in beer/ Secure position in beer/happoshu happoshu market market

Strengthen core brands

・Bolster Super Dry and Honnama brands

Create new value and new demand

・Provide new products and value that anticipate needs

◆ ◆ Strengthen cost competitiveness Strengthen cost competitiveness

Increase marginal income

・Further cost reductions in production and logistics

Cut fixed expenses

・Efficiency of sales promotion expenses (⇒ change to

variable cost) *See page 21 for specific business strategies

20 40 60 80 100 120 140 160 180 200 220 240 02 03 04(E) 06(E)

2003 2004 (est.) 2006 (est.)

Beer 150.15 141.5 138.5 Happoshu 54.53 63.5 76.5 Total 204.68 205.0 215.0

■ ■ Sales Volume Guidelines Sales Volume Guidelines 11

Beer Happoshu

Alcoholic Beverages Business: Beer/ Alcoholic Beverages Business: Beer/Happoshu Happoshu Strategies Strategies

(Millions of cases) (Millions of cases)

SLIDE 16

31.2 32.3 35 36 12.2 14.6 17 20 20.6 51.9 59 70 13.1 23.5 37 56 20 40 60 80 100 120 140 160 180 200 2002 2003 2004 (est) 2006 (est)

(Billions of yen)

■ ■ Sales Guidelines by Category Sales Guidelines by Category 【Goal】 Diversify earnings in the alcoholic beverages business through greater sales and efficiency 【Basic Strategies】 ◆ ◆ Establish position in each market category Establish position in each market category

Concentrate resources in growth fields
Strengthen existing brands and create new value

and new demand

Utilize the largest sales network in the alcohol

industry ◆ ◆ Reduce costs and improve sales efficiency Reduce costs and improve sales efficiency

Further reduce supplier costs
Efficiency of sales promotion expenses

*See page 23 for specific business strategies

12

Whiskey & Spirits Wine Shochu Low alcohol beverages

2003 2004 (est) 2006 (est) Four Category Total 122.3 148 182

Alcoholic Beverages Business: Other Alcohol Categories Strategie Alcoholic Beverages Business: Other Alcohol Categories Strategies s

(Billions of yen)

SLIDE 17

20 40 60 80 100 120

2000 2001 2002 2003 2004 (est) 2006 (est)

■ ■ Cost Reductions Achieved and Current Plan Cost Reductions Achieved and Current Plan 13 ■ ■ Advertising and Promotional Expenses Estimate Advertising and Promotional Expenses Estimate

Beer Happoshu Four Categories

*Cuts during 2002 and 2003 were mainly in production and logistics

(Billions of yen)

【Advertising and Sales Promotion Expense Strategies】 ◆ ◆ Beer/ Beer/happoshu happoshu

Control total cost (maintain 2004 level,

reduced ¥7.4 bil. from 2003)

Secure investment resources for new products

though cost reductions for existing brands ◆ ◆ Other Alcohol Categories (Four Categories) Other Alcohol Categories (Four Categories)

Invest resources to establish market position

in each category

Manage the sales/SGA ratio

*See page 24 for specific business strategies

Alcoholic Beverages Business: Strengthening Cost Competitiveness Alcoholic Beverages Business: Strengthening Cost Competitiveness

2002 2003 2004-2006 Total (est) 15.3 bil. yen 10.8 bil. Yen 14 bil. Yen

【Breakdown of 2004-2006 Reductions】 ■ ■ Production and logistics Production and logistics ¥ ¥5 5 bil bil. . ■ ■ Personnel, sales promotion, others Personnel, sales promotion, others ¥ ¥9 9 bil bil. .

SLIDE 18

Product Product Development Development Structure Structure

Combine unique technologies from newly acquired Group companies with

technology from existing companies ⇒ Establish a new, highly creative product development structure that responds to evolving customer needs

Combine unique technologies from newly acquired Group companies with

technology from existing companies ⇒ Establish a new, highly creative product development structure that responds to evolving customer needs 14

Strengthen Group competitiveness, focusing on Strengthen Group competitiveness, focusing on the alcoholic beverages business the alcoholic beverages business Marketing Marketing Structure Structure

Establish a synergistic structure that quickly responds to customer and market

changes

Strengthen cross-utilization of sales support companies (AFM, ADS, Full House)

within the Group

Establish a synergistic structure that quickly responds to customer and market

changes

Strengthen cross-utilization of sales support companies (AFM, ADS, Full House)

within the Group

R&D Structure R&D Structure

Strengthen the lateral R&D structure between the alcohol, soft drinks and food

and pharmaceuticals businesses

Utilize the unique technologies of each company to promote basic ingredient

development with potential for the future, and new business development

Strengthen the lateral R&D structure between the alcohol, soft drinks and food

and pharmaceuticals businesses

Utilize the unique technologies of each company to promote basic ingredient

development with potential for the future, and new business development

Supply Chain Supply Chain Management Management

Enhance market quality in line with Group business expansion

⇒ Strengthen and optimize Group SCM as a single unit

Enhance market quality in line with Group business expansion

⇒ Strengthen and optimize Group SCM as a single unit

Alcoholic Beverages Business: Measures to Enhance Competitivenes Alcoholic Beverages Business: Measures to Enhance Competitiveness s

SLIDE 19

■ ■ Strategies to Strengthen Existing Businesses Strategies to Strengthen Existing Businesses

Lower the break-even point through structural reforms (optimal production structure,

efficiency of vending machines, personnel optimization)

Focus resources on core brands ⇒ continue growth with greater investment in growth

fields

Lower the break-even point through structural reforms (optimal production structure,

efficiency of vending machines, personnel optimization)

Focus resources on core brands ⇒ continue growth with greater investment in growth

fields

Investment of approx. ¥100 bil. anticipated to build a new growth structure for the Group

◇ Priority on consolidated performance, and proposals with high degrees of synergy within business domains ◇ Attain strong brands in each business, strengthen the marketing structure, and consider cooperation with major producers in Japan and overseas

Investment of approx. ¥100 bil. anticipated to build a new growth structure for the Group

◇ Priority on consolidated performance, and proposals with high degrees of synergy within business domains ◇ Attain strong brands in each business, strengthen the marketing structure, and consider cooperation with major producers in Japan and overseas ■ ■ Sales increase realized by M&A activities and other investment Sales increase realized by M&A activities and other investment 15

Pursue proactive direct marketing of supplements and health foods
Success through bolstered R&D ⇒ develop and expand line of products incorporating

ingredients with new properties

Pursue proactive direct marketing of supplements and health foods
Success through bolstered R&D ⇒ develop and expand line of products incorporating

ingredients with new properties

Focus on China and Asia, expanding business and improving profitability
Develop joint soft drink business with Tingyi, and utilize the distribution network to

expand business

Focus on China and Asia, expanding business and improving profitability
Develop joint soft drink business with Tingyi, and utilize the distribution network to

expand business Sales: ¥189.4 bil. (‘03) ⇒ ¥202 bil. (‘06) Sales: ¥22.0 bil. (‘03) ⇒ ¥30 bil. (‘06) Sales: ¥13.2 bil. (‘03) ⇒ ¥28 bil. (‘06) Sales: +¥140 bil. (‘06)

Core Businesses: Strengthening Existing Businesses and Investmen Core Businesses: Strengthening Existing Businesses and Investment t

Soft Drinks Soft Drinks Business Business Food and Food and Pharmaceuticals Pharmaceuticals Overseas Overseas Businesses Businesses Soft Drinks Soft Drinks Food & Food & Pharmaceuticals Pharmaceuticals Overseas Overseas Businesses Businesses

SLIDE 20

■ ■ Financial/Business Restructuring and Accounting Changes Financial/Business Restructuring and Accounting Changes

(Billions of yen)

16

1) 1) Business Business Investment Investment 2) 2) Shareholder Shareholder Returns Returns 3) 3) Reducing Reducing Financial Financial Liabilities Liabilities

Strategic investment for Group medium to long-term growth

⇒Transform business portfolio to create new growth structure

Strategic investment for Group medium to long-term growth

⇒Transform business portfolio to create new growth structure

Treasury stock acquisition at proper levels and timing
Provide ample return of earnings centered on continuous, stable

dividends

Treasury stock acquisition at proper levels and timing
Provide ample return of earnings centered on continuous, stable

dividends

Promote cuts to achieve an appropriate capital balance

(debt/equity ratio)

Promote cuts to achieve an appropriate capital balance

(debt/equity ratio)

Flexible distribution, considering management and the business environment Cumulative cash flow

ver three years
Approx. ¥200 bil.

■ ■ Cash Flow Strategies Cash Flow Strategies 2000 2001 2002 2003 Marketable securities

45.3 10.2 11.0 1.3

Pension reserve shortfall

18.1 20.4

Business restructuring

5.8 5.9 5.4 7.7

Real estate disposal

2.0 3.2 4.6 8.3

Financial Position Improvements and Cash Flow Strategies Financial Position Improvements and Cash Flow Strategies

【2004-2006】

■ ■ Introduction of asset impairment Introduction of asset impairment accounting for fixed assets accounting for fixed assets ⇒ Anticipated loss on disposal of real estate approx. ¥30 billion

Raise net income level ⇒ Plan for new record levels (2004-2006)

SLIDE 21

Personnel System Personnel System Compensation Compensation System System

Adopt personnel and compensation systems based on ability and success ⇒

Invigorate the organization

Strengthen the commitment of the Group company representatives, Asahi

Breweries Board of Directors, and executive officers to the medium-term plan ⇒ Leadership on business solutions and form a new value outlook

Adopt personnel and compensation systems based on ability and success ⇒

Invigorate the organization

Strengthen the commitment of the Group company representatives, Asahi

Breweries Board of Directors, and executive officers to the medium-term plan ⇒ Leadership on business solutions and form a new value outlook

Introduce new system to support career development fully utilizing skills and

abilities

Expand management improvement seminars and manager training
Introduce new system to support career development fully utilizing skills and

abilities

Expand management improvement seminars and manager training

17 ◆ ◆ Initiatives Toward Organizational Reform Initiatives Toward Organizational Reform ◆ ◆ Harmony with Society Harmony with Society

Increasing Increasing Societal Trust Societal Trust

Promote comprehensive approach to increasing societal trust through full

quality assurance of safety and reliability, global environmental preservation, strict adherence to laws and company regulations, timely and accurate release

f information, and harmony with global society
Strengthen the internal Group structure (CSR committee), and establish

unique CSR program

Promote comprehensive approach to increasing societal trust through full

quality assurance of safety and reliability, global environmental preservation, strict adherence to laws and company regulations, timely and accurate release

f information, and harmony with global society
Strengthen the internal Group structure (CSR committee), and establish

unique CSR program

Education System Education System

Organizational Reform and Harmony with Society Organizational Reform and Harmony with Society

Foster a corporate culture that rewards innovation, and has the Foster a corporate culture that rewards innovation, and has the will to meet any challenge will to meet any challenge

SLIDE 22

2004 2004 Performance Forecasts and Performance Forecasts and Business Strategies Business Strategies

SLIDE 23

Establish a new earnings structure for the first year of the Second Medium-Term Management Plan

Alcoholic Beverages ⇒ Pursue further growth and efficiency as a leading comprehensive alcohol producer
Soft Drinks, Food & Pharmaceuticals, Overseas Business ⇒ Reform the earnings structure of existing

businesses, investigate and begin investment in new ones

Suppliers, Support Businesses ⇒ Improve consolidated earnings through greater quality and cost

competitiveness ■ ■ 2004 2004 Full Year Forecasts (consolidated) Full Year Forecasts (consolidated) ◆ ◆ Strengthen the foundations for growth in Strengthen the foundations for growth in each business each business ⇒ Increase sales by ensuring customer satisfaction ◆ ◆ Strengthen cost competitiveness Strengthen cost competitiveness ⇒ Cost reductions in core businesses (Alcohol ¥9.0 bil.; Soft Drinks ¥3.7 bil.) ◆ ◆ Further improve the financial position Further improve the financial position ⇒ Implement impairment accounting ◆ ◆ Pursue flexible cash flow strategies Pursue flexible cash flow strategies ⇒ Business investment, financial liabilities reduction, and share buyback

2004 2004 Group Business Strategies and Consolidated Forecasts Group Business Strategies and Consolidated Forecasts

18

(Billions of yen) Plan 2003

Asahi Breweries 1131.0 1107.0 24.0 (2.2%) Asahi Soft Drinks 196.5 189.4 7.1 (3.7%) Asahi Food & Healthcare 25.5 22.0 3.5 (15.9%) Overseas Businesses 17.0 13.2 3.8 (28.8%) Other 70.0 68.7 1.3 (1.9%) Net Sales 1440.0 1400.3 39.7 (2.8%) Asahi Breweries 78.0 72.4 5.6 (7.8%) Asahi Soft Drinks 5.0 2.8 2.2 (78.6%) Asahi Food & Healthcare

0.4

0.0

0.4
Overseas Businesses
1.8
1.5
0.3
Other

3.2 5.2

2.0
Operating Income

84.0 78.9 5.1 (6.4%) Ordinary Income 80.0 70.4 9.6 (13.5%) Net Income 26.0 23.2 2.8 (12.0%)

2004 Plan (Jan-Dec) Change (%)

SLIDE 24

“Pursue further growth and efficiency as a leading comprehensive alcoholic beverage producer”

Foster the impression of the leader or close second in each category
Improve cost competitiveness through reductions in production and logistics, and fixed costs

“ “Pursue further growth and efficiency as a leading comprehensive Pursue further growth and efficiency as a leading comprehensive alcoholic beverage producer alcoholic beverage producer” ”

Foster the impression of the leader or close second in each category
Improve cost competitiveness through reductions in production and logistics, and fixed costs

■ ■ 2004 2004 Full Year Forecasts (non Full Year Forecasts (non-

consolidated)

consolidated) ◆ Further strengthen core brands ⇒ Strengthen core brands in each category ◆ Offer new value, create new demand ⇒ Offer new products by combining Group strengths ◆ Strengthen cost competitiveness ⇒ Reduce variable and fixed costs Cut production costs (¥3.0 bil.), sales promotion expenses (¥3.6 bil.), and personnel costs (¥1.6 bil.)

(Billions of yen)

Plan 2003 Beer 742.4 784.4

42.0

(-5.4%) Happoshu 236.6 195.6 41.0 (21.0%) Others 152.0 127.0 25.0 (19.7%) Net Sales 1,131.0 1,107.0 24.0 (2.2%) Operating Income 78.0 72.4 5.6 (7.8%) Ordinary Income 67.0 62.8 4.2 (6.6%) Net Income 23.0 16.4 6.6 (40.4%) 2004 (Jan-Dec) Change (%)

2004 2004 Alcoholic Beverages Strategies and Forecasts Alcoholic Beverages Strategies and Forecasts (non

(non-

consolidated)

consolidated)

19

SLIDE 25

L a g e r M a l t s T a n r e i S M a g n u m J u n s e i A l p h a Y e b i s u N a m a S h i b

r

i B l a c k L a b e l I c h i b a n S h i b

r

i D i e t G r e e n L a b e l

20 40 60 80 100 120 140 160

(Millions of cases)

(Source: Nikkei Sangyo Shimbun)

S u p e r D r y Aqua Blue (launched July) ■ ■ Beer/ Beer/Happoshu Happoshu Taxable Volume (Jan Taxable Volume (Jan-

Dec 2003)

Dec 2003) ■ ■ Sales of Major Brands Sales of Major Brands

Asahi has retained its share of the beer/happoshu market, despite a

shrinking market overall for two consecutive years

Asahi Super Dry leads the beer category, increasing its share annually for

12 consecutive years

Amid the first ever decline in the happoshu market, the popularity of new

products allowed us to achieve double-digit growth

2003 2003 Beer

150.15

13.01

(-8.0%) 48.2% (+0.8)

Beer

311.69

32.24

(-9.4%) 60.7% (-2.1)

Happoshu

54.53 7.38 (+15.7%) 27.1% (+3.9)

Happoshu

201.51

1.97

(-1.0%) 39.3% (+2.1)

Total

204.68

5.62

(-2.7%) 39.9% (+1.5)

Total

513.21

34.21

(-6.3%) 100.0%

Industry Overall

YoY change (%) Breakdown (%) Asahi Breweries YoY change (%) Share (% change)

20 Sparks (launched Feb) Honnama

(Millions of cases)

Beer/ Beer/Happoshu Happoshu: 2003 Overview : 2003 Overview

Beer Beer Happoshu Happoshu

SLIDE 26

(Millions of cases)

Maximize the potential of the Super Dry brand

⇒ Step up product rotations to ensure freshness, and strengthen product sales promotions by

industry segment

Alongside traditional mass marketing, develop new ideas to heighten appeal
f beer

⇒ Launch new product for restaurants and bars, Asahi Draft Beer Jyukusen (March 10, 2004)

Maximize the potential of the Super Dry brand

⇒ Step up product rotations to ensure freshness, and strengthen product sales promotions by

industry segment

Alongside traditional mass marketing, develop new ideas to heighten appeal
f beer

⇒ Launch new product for restaurants and bars, Asahi Draft Beer Jyukusen (March 10, 2004)

Further strengthen the Honnama brand, now a standard brand in the market

⇒ Step up product rotations to ensure freshness, refine the Honnama brand, sales promotion

campaigns

Offer innovative new products for consumers who prefer happoshu

⇒ Launch of Asahi Honnama Off Time (March 17, 2004)

Further strengthen the Honnama brand, now a standard brand in the market

⇒ Step up product rotations to ensure freshness, refine the Honnama brand, sales promotion

campaigns

Offer innovative new products for consumers who prefer happoshu

⇒ Launch of Asahi Honnama Off Time (March 17, 2004) ■ ■ Beer/ Beer/Happoshu Happoshu Sales Plan Sales Plan

【2004 Industry Outlook】 ◆ Beer: Decline approx. 6% ◆ Happoshu: Increase approx. 6% ◆ Combined: Slight decrease assumed

Plan 2003 YoY Super Dry 138.5 146.60

5.5%

Others 3.0 3.26

8.0%

Beer 141.5 149.86

5.6%

Honnnama 33.5 37.60

10.9%

Aqua Blue 25.0 11.45 +118.3% Off Time 4.0 －－ Others 1.0 5.20 － Happoshu 63.5 54.25 +17.1% Total 205.0 204.11 +0.4% 2004 (Jan-Dec)

Beer/ Beer/Happoshu Happoshu: 2004 Sales Plan and Initiatives : 2004 Sales Plan and Initiatives

21

Beer Beer Happoshu Happoshu

SLIDE 27

【2003 Industry Estimates】 ◆ Shochu: Approx. 8% increase ◆ Whiskey & Spirits: Approx. 10% decline ◆ Low-alcohol drinks: Approx. 11% increase ◆ Wine: Approx. 6% decline

(Billions of yen) 2003 2002 Shochu

51.9 20.6 31.3 (152%)

Whiskey & Spirits

32.3 31.2 1.1 (4%)

Low-alcohol Drinks

23.5 13.1 10.4 (80%)

Wine

14.6 12.2 2.4 (20%)

Other alcohol

2.6 1.6 1.0 (63%)

Total

124.9 78.7 46.2 (59%)

YoY (%) 2003 (Jan-Dec)

■ ■ 2003 2003 Asahi Sales Results Asahi Sales Results

22

Alcohol Product Diversification: 2003 Overview Alcohol Product Diversification: 2003 Overview

【Results from integration of core brands】

Cocktail Partner (5.87 mil. cases: +230%)
Shunka Shibori (3.90 mil. cases: +80%)
Daigoro (50,200kl: +10%)
Kanoka (13,400kl: +40%)
Black Nikka Clear Blend (1.48 mil. cases: +6%)

* Brand figures include M&A of each company from Jan-Aug 2002)

SLIDE 28

◆ ◆ In each category, strengthen existing brands and develop innovat In each category, strengthen existing brands and develop innovative products by ive products by combining Group capabilities combining Group capabilities

Sales Target: ¥59 bil. (YoY +14%)

・Strengthen core Daigoro, Kanoka and Ichibansatsu brands through commercial routes ・Enhance lineup of products combining Group strengths, such as SAZAN, following the soba shochu Gen-an

Sales Target: ¥59 bil. (YoY +14%)

・Strengthen core Daigoro, Kanoka and Ichibansatsu brands through commercial routes ・Enhance lineup of products combining Group strengths, such as SAZAN, following the soba shochu Gen-an

Sales Target: ¥37 bil. (YoY +58%)

・Establish the Cocktail Partner and Shunka Shibori brands, develop extension brands ・Combine expertise enhanced by M&A, launch strategic new products focused on consumer preferences

Sales Target: ¥37 bil. (YoY +58%)

・Establish the Cocktail Partner and Shunka Shibori brands, develop extension brands ・Combine expertise enhanced by M&A, launch strategic new products focused on consumer preferences

Sales Target: ¥35 bil. (YoY +8%)

・Strengthen core brands Black Nikka Clear Blend, Taketsuru, Jim Beam and Remy Martin ・Maintain clarified product and sales strategies for the household and commercial segments

Sales Target: ¥35 bil. (YoY +8%)

・Strengthen core brands Black Nikka Clear Blend, Taketsuru, Jim Beam and Remy Martin ・Maintain clarified product and sales strategies for the household and commercial segments

Sales Target: ¥17 bil. (YoY +17%)

・Utilize a top class lineup of brands in the industry, including Saint Neige and Maxxium ・Launch low-priced, large volume products for the household volume retail market

Sales Target: ¥17 bil. (YoY +17%)

・Utilize a top class lineup of brands in the industry, including Saint Neige and Maxxium ・Launch low-priced, large volume products for the household volume retail market

Overall Sales Target: Overall Sales Target: ¥ ¥150 150 bil

bil. (

. (YoY YoY +20%) +20%)

Alcohol Product Diversification: 2004 Sales Plan and Initiatives Alcohol Product Diversification: 2004 Sales Plan and Initiatives

23

Shochu Shochu Whiskey & Whiskey & Spirits Spirits Low Low-

Alcohol

Alcohol Drinks Drinks Wine Wine

SLIDE 29

■ ■ Advertising and Sales Promotion Expenses by Category Advertising and Sales Promotion Expenses by Category

Alcoholic Business : Advertising and Promotion Expense Estimates Alcoholic Business : Advertising and Promotion Expense Estimates

24

Advertising and promotional expense changed to variable cost Advertising and promotional expense changed to variable cost ⇒ ⇒ Alcoholic beverage business earnings more stable and long term Alcoholic beverage business earnings more stable and long term

(Billions of yen)

2000 2001 2002 YoY YoY

Beer

86.5 75.4 66.0 60.3

5.7

51.9

8.4

Happoshu

15.8

19.6 20.5 0.9 21.5 1.0

Beer/Happoshu Total

86.5 91.2 85.6 80.8

4.8

73.4

7.4

Net sales/promotion expense ratio 8.3% 8.5% 8.5% 8.3%

0.2%

7.5%

0.8%

Other Alcohol Categories

10.7

20.4 28.3 7.9 32.1 3.8

Net sales/promotion expense ratio 23.6% 25.9% 22.7%

3.2%

21.4%

1.3%

Total

86.5 101.9 106.0 109.1 3.1 105.5

3.6

Net sales/promotion expense ratio 8.3% 9.1% 9.7% 9.9% 0.2% 9.3%

0.5%

Sales promotion expenses

54.8 61.0 67.9 77.9 10.0 77.5

0.4

Advertising expenses

31.8 40.9 38.1 31.2

6.9

28.0

3.2

・Happoshu launch ・M&A (Sept)

・Launch of new beer/happoshu products ・Nikka sales integration (Apr) ・M&A full year effect (Jan-Aug)

2003 2004 Plan

SLIDE 30

Information in this material is not intended to solicit sales or purchases of Asahi Breweries stock shares. The comments and estimates in this document are based on the company’s judgment at the time of publication and their accuracy is not guaranteed. They are subject to change without notice in the future. The company and its officers and representatives hold no responsibility for any damage or inconvenience that may be caused by any part of this material.