Suntory Beverage & Food (2587): Q1 Results: Negative; constructive on pricing, but cost unclear (notes attached)

Research evidence excerpt

Suntory Beverage & Food (2587): Q1 Results: Negative; constructive on pricing, but cost unclear (notes attached)

Earnings Briefing (at 3:30 pm on May 13)

Q&A

【Impact of Middle East Geopolitical Developments】

Q: Please provide more detail on the current outlook compared with

assumptions at the beginning of the fiscal year regarding Middle East

geopolitical developments. How have views on raw material costs evolved in

Japan and globally? Are there any risks of procurement bottlenecks?

A: Excluding the impact of Middle East geopolitical developments, we believe that our

cost outlook for the year remains broadly within the assumptions made at the beginning

of the fiscal year. Based on FY12/26 Q1 results and current conditions, we have been

able to secure raw materials related to Middle East developments without major

disruption at this stage. That said, the outlook remains highly uncertain. We are

examining multiple scenarios, including potential changes to procurement methods. At

this point, we are not in a position to quantify the cost impact.

Q: Given that procurement is currently manageable, is it reasonable to assume

that securing volumes will not be a major issue even if costs rise in the second

half?

A: We view the second half as extremely uncertain. By current conditions, we are

referring to FY12/26 Q2, the present phase. Conditions in the second half could change

materially depending on how geopolitical risks unfold.

Q: Even if procurement remains possible, could there be scenarios in which

product supply or sales activity would need to be adjusted?

A: This would depend on the situation. If supply were to become materially constrained,

similar to past large-scale disasters, we would need to determine how best to fulfill our

supply responsibilities.