Orix Corporation · TSE:8591
Orix — 9M FY2014.3 Earnings Presentation
44 slides from Orix's earnings presentation, Feb 6, 2014
Slide 1: Third Quarter Consolidated Financial Results
ORIX Corporation (TSE: (TSE 88591; 91 NYSE NYSE: IX) Third Quarter Consolidated Financial Results For the Nine Month Period Ended April 1 – December 31, 2013 February 6, 2014 Copyright © 2014 ORIX Corporation All rights reserved.
Slide 2: Performance Overview
Performance Overview 118.2bn in Net Income, up 31% year on year Achieved 82% of 145bn full year target Net Income* and ROE （JPY Bn） 200 9 0% 9.0% 7.4% 150 Full Year 6 2% 6.2% Target 145.0 bn 100 111.9 118.2 50 83.5 0 12.3 13.3 14.3 3Q *Net income refers to Net Income Attributable to ORIX Corpora
Slide 3: Performance: Segment Profits
Performance: Segment Profits Increased profits in four segments including Overseas Business, Real Estate, Retail and Maintenance Leasing Segment Profits （JPY Bn） 180 Corporate Financial Services Maintenance Leasing g 140 Real Estate 100 Investment and Operation 60 Retail 20 Overseas Business 12.3
Slide 4: Performance: Segment Assets
Performance: Segment Assets Assets increased in Overseas Business, Retail and Maintenance Leasing segments, while ROA also increased Segment Assets* （JPY Tn) 7 2.3% 2.5% Corporate Financial Services 6 2.0% Maintenance Leasing 1.8% 5 Real Estate 1.3% 1.5% 4 Investment and 3 1.0% Operation Retail 2
Slide 5: Segment Performance 1. Corporate Financial Services
Segment Performance 1. Corporate Financial Services （JPY Bn） 12.3 13.3 13.3 3Q 14.3 3Q Change Base Profits 26.1 26.1 18.5 15.5 84% Capital Gains 0.4 0.3 0.2 1.8 - Provisions -2.5 -0.3 0.4 0.7 - I Impairments i t -1.1 11 -0.1 01 -0.1 01 00 0.0 - Segment Profits 23.0 25.9 19.0 18.0 94% Segment Assets
Slide 6: Segment Performance 2. Maintenance Leasing
Segment Performance 2. Maintenance Leasing （JPY Bn） 12.3 13.3 13.3 3Q 14.3 3Q Change Base Profits 33.1 34.9 26.1 30.6 117% Capital Gains 0.0 0.0 0.0 0.0 - Provisions 0.2 0.1 -0.2 -0.4 - Impairments 00 0.0 -0.1 01 -0.1 01 00 0.0 - Segment Profits 33.3 34.9 25.8 30.3 117% S Segment t Assets A t 490 9
Slide 7: Segment Performance 3. Real Estate
Segment Performance 3. Real Estate （JPY Bn） 12.3 13.3 13.3 3Q 14.3 3Q Change Base Profits 18.3 25.0 19.1 21.0 110% Capital Gains 14.2 16.5 10.2 17.0 - Provisions -3.0 0.4 0.5 -1.9 - Impairments -28.2 28 2 -36.4 36 4 -25.6 25 6 -20.3 20 3 - Segment Profits 1.3 5.6 4.2 15.7 379% Segment Assets 1,390.5
Slide 8: Segment Performance 4. Investment and Operation
Segment Performance 4. Investment and Operation （JPY Bn） 12.3 13.3 13.3 3Q 14.3 3Q Change Base Profits 22.4 29.1 24.6 24.0 97% Capital Gains 5.3 19.0 16.4 8.5 - Provisions -7.5 -5.5 -2.6 -1.7 - I Impairments i t -4.2 42 -7.6 76 -5.8 58 -0.9 09 - Segment Profits 16.0 34.9 32.7 29.9 91% Segment Assets
Slide 9: Segment Performance 5. Retail
Segment Performance 5. Retail （JPY Bn） 12.3 13.3 13.3 3Q 14.3 3Q Change Base Profits 32.8 42.1 31.6 38.7 122% Capital Gains 0.3 3.7 3.4 3.7 - Provisions -1.1 -2.6 -1.5 -2.8 - I Impairments i t -12.7 12 7 00 0.0 00 0.0 00 0.0 - Segment Profits 19.4 43.2 33.6 39.6 118% Segment Assets 1,742.9 1,994.1 1
Slide 10: Segment Performance 6. Overseas Business
Segment Performance 6. Overseas Business （JPY Bn） 12.3 13.3 13.3 3Q 14.3 3Q Change Base Profits 40.4 37.5 24.7 45.2 183% Capital Gains 21.2 19.3 11.8 13.4 - Provisions -3.8 -2.4 -1.1 -2.9 - I Impairments i t -8.0 80 -1.6 16 -1.1 11 -3.3 33 - Segment Profits 49.8 52.8 34.3 52.4 153% Segment Assets 1,
Slide 11: Financials: Changing Balance Sheet Structure
Financials: Changing Balance Sheet Structure Improving profitability while strengthening financial soundness (Percentage of (ROA) （JPY Tn） Real Estate) 10 Real Estate Segment Others excl. Real Estate 40% Percentage of Real Estate Segment Asset ROA 8 30% 6 20% 4 10% 2 0 0% 07.3 08.3 09.3 10.3 11.3
Slide 12: Financials: Changing Revenue Structure
Financials: Changing Revenue Structure Firm growth in base profits. Enhanced stable growth through Robeco acquisition （JPY Bn） 300 Base Profits Capital Gains 250 200 150 100 50 0 07.3 08.3 09.3 10.3 11.3 12.3 13.3 14.3 3Q Copyright © 2014 ORIX Corporation All rights reserved. 11
Slide 13: Financials: Status of Shareholders' Equity
Financials: Status of Shareholders’ Equity Ratio of capital employed is 80% after Robeco acquisition Capital employment status change in conjunction with portfolio turnover Ratio of Capital Employed and ROE Breakdown of Capital Employed (JPY BBn)) 100% 2,000 9.0% 10.0% 20% 7.4% 9.0% 80% 8.0% 1,5
Slide 14: Financials: Funding Structure
Financials: Funding Structure Realized both stabilization of funding and cost-control Pursue stable and lengthened maturities Breakdown of Funding and Breakdown of Funding Sources Trend in Long-term Debt and Funding Cost (As of Dec. 31 2013 / Excl. ABS and CMBS) （Funding Balance and Share of Lon
Slide 15: Financials: Funding Structure -Foreign Currency Funding-
Financials: Funding Structure -Foreign Currency Funding- Foreign currency funding increased to more than 30% with Robeco acquisition USD and Euro cover 60%, diversified Asian currencies Breakdown of Foreign Breakdown of Funding Sources Currency Funding (As of Dec. 31, 2013 / Excl. ABS and CMBS)
Slide 16: Financials: Liquidity on-Hand
Financials: Liquidity on-Hand Maintained high liquidity on-hand even after Robeco acquisition Liquidity vs. Short-term Liabilities （JPY Bn） 1,500 289% 295% 290% Available Commitment Line(1) 204% Cash and Cash Equivalents(1) 1,000 CP (2) 500 Current Redemptions（Bond, ）( ) MTN）(2) Liquidity Coverage
Slide 17: Financials: Bond Issuances / Maturity Ladder
Financials: Bond Issuances / Maturity Ladder Promote lengthened maturities by actively issuing bonds with over 5 year term Term Issued Amount Issued to Coupon T Spread (y ) (year) ORIX /Domestic Bond 170 April 30,2013 JPY 15 Bn 5 Retail Investors 0.475% 29bp 171 April 30,2013 JPY 20 Bn 10 Retail I
Slide 18: Financials: Asset Quality
Financials: Asset Quality Coverage ratio against loans individually evaluated for impairment is 94% Coverage Ratio of Loans Individually Trend in Provisions / Impairments Evaluated for Impairment （JPY Bn） （JPY Bn） B ） 12 12 12.12 13 3 13.3 13 12 13.12 90 Corporate Loans individually evaluated 1.3%
Slide 19: Progress on Strategies
Progress on Strategies Steady build-up of investments that agree with direction of the strategies Acceleration of Shift from Debt to Equity, q y, “Finance + Services” and then on to Operations Robeco MEDGULF Mega-Solar, 300MW Target (¥250.7bn/Asset Management) (¥21.3bn/Insurance/Saudi Arabia) (App
Slide 20: Summary
Summary 118.2bn in Net Income,, 31% increase YoY 9% ROE on an annualized basis Establish new pillars of business, aim to maintain strong growth Copyright © 2014 ORIX Corporation All rights reserved. 19
Slide 21: Appendix
Appendix pp Copyright © 2014 ORIX Corporation All rights reserved. 20
Slide 22: About ORIX: Sustainable Growth
About ORIX Sustainable Growth Continuous profitability for 48 years, achieving sustainable growth FY2009.3 (JPY Bn) Net Income Attributable to ORIX Corporation Collapse of L h Lehman Brothers B th 2,000 200 FY2014.3 145.0bn (Target) 1,500 150 FY2002.3 Bursting of FY2013.3 the IT Bubble 111.9bn FY1
Slide 23: About ORIX: Business expertise and Group-wide capability
About ORIX Business expertise and Group-wide capability ORIX evolved by moving into neighboring areas while increasing its finance and asset expertise Credit Screening and Banking Asset Management Finance Capability Life Insurance Investment Lending Principal investment Business rehabilitation su
Slide 24: About ORIX: Expansive Domestic and Overseas Network
About ORIX Expansive Domestic and Overseas Network Expanded its global reach starting with Hong Kong in 1971, using knowhow developed in Japan Not as ambitious as to call it a globalization globalization, but rather it is a way of eliminating barriers that exist in Japan 35 Countries and Regions
Slide 25: Appendix(1) Trend in Performance
Appendix(1) Trend in Performance (JPY Bn) 12.3 13.3 13.3 3Q 14.3 3Q Total Revenue 965.7 1,062.4 781.2 965.6 *1 Net Income 83 5 83.5 111 9 111.9 90 1 90.1 118 2 118.2 Segment Assets 6,123.9 6,382.7 6,327.2 7,029.0 Total Assets 8,332.8 8,439.7 8,241.8 8,673.6 Shareholders' Equity 1,380.7 1,643.6 1,479
Slide 26: Appendix(2) Profit by Segment
Appendix(2) Profit by Segment (JPY Bn) 12.3 13.3 13.3 3Q 14.3 3Q Change Corporate Financial Services 23.0 25.9 19.0 18.0 94% Maintenance Leasing 33.3 34.9 25.8 30.3 117% Real Estate 1.3 5.6 4.2 15.7 379% Investment and Operation 16 0 16.0 34 9 34.9 32 7 32.7 29 9 29.9 91% Retail 19.4 43.2 33.6 39.6
Slide 27: Appendix(3) Assets by Segment & Region
Appendix(3) Assets by Segment & Region 12.3 13.3 14.3 3Q (JPY Bn) Corporate Financial Services 946.5 943.3 954.6 Maintenance Leasing 490.9 549.3 596.2 Real Estate 1,390.5 1,133.2 1,008.0 Investment and Operation 471.9 444.3 444.6 Retail 1,742.9 1,994.1 2,096.9 Overseas Business 1,081.2 1,318.4 1,928
Slide 28: Appendix(4) Funding and Liquidity
Appendix(4) Funding and Liquidity (JPY Bn) 12.3 13.3 14.3 3Q CP 180.4 151.5 103.9 Borrowings from Financial Institutions 2,277.3 2,368.0 2,508.7 Bonds / MTN 1,393.0 1,283.0 1,253.4 Deposits 1,103.5 1,078.6 1,122.4 Subtotal 4,954.3 4,881.1 4,988.5 ABS, CMBS 874.7 679.8 293.4 Short-term Debt, Long-ter
Slide 29: Appendix(5) Real Estate Portfolio
Appendix(5) Real Estate Portfolio ■ Trend in Real Estate Segment Assets by Type (JPY Bn) 12.3 13.3 14.3 3Q Rental Property 876.3 754.4 689.1 Under Lease 705.9 603.4 567.7 Under Development 170.4 151.0 121.4 Condo Assets 87.3 55.4 38.0 NRL / S Specified ifi d B Bonds d 205 4 205.4 113 4 113.4 * 66.2
Slide 30: Appendix(6) Real Estate Portfolio
Appendix(6) Real Estate Portfolio (JPY Bn) ■ Rental Property Assets by Type (13.12) Under Lease Under Property Type Total B l Balance NOI Yield Yi ld Development D l t Office Buildings 185.1 4.1% 62.7 247.8 Logistics Centers 23.5 5.9% 1.3 24.8 Commercial Facilities 135.0 6.4% 28.0 163.0 Rental Condo
Slide 31: Appendix(7) Robeco
Appendix(7) Robeco (JPY Bn) 14.3 2Q 14.3 3Q Segment Profits 4.4 5.9 Segment Assets 328.9 365.0 ROA (After Tax, Quarterly Basis) 3.3% 4.2% 2012.1-12 * 2013.1-6 * 2013.7-9 2013.10-12 End of Period AUM (Billions of euro) 188 9 188.9 192 5 192.5 197 1 197.1 205 2 205.2 Net New Money (Billions of euro) 1
Slide 32: Appendix(8) Asset Quality
Appendix(8) Asset Quality ■ Asset Quality (Adjusted **) (JPY Bn) 12.3 13.3 14.3 3Q Investment in Direct Financing Leases 728.0 826.4 925.6 90+Days Past Past-Due Due Direct Financing Leases 17 4 17.4 15 8 15.8 15 4 15.4 Installment Loans 2,073.2 2,176.1 2,122.6 90+Days Past-Due Loans 8.6 7.7 6.9 Not
Slide 33: Appendix(9) Reconciliation Table of Non-GAAP Financial Measurement
Appendix(9) Reconciliation Table of Non-GAAP Financial Measurement These materials include certain financial measures presented on a basis not in accordance with U.S. GAAP, or non-GAAP measures, including total assets and long-term liabilities excluding liabilities in line with securitized transacti
Slide 34: Appendix(10) Reconciliation Table of Non-GAAP Financial Measurement
Appendix(10) Reconciliation Table of Non-GAAP Financial Measurement (JPY Bn) Key Ratio 12.3 13.3 14.3 3Q Total Assets （a） 8,332.8 8,439.7 8,673.6 Deduct: educt Payables ayab es uunder de Secu Securitized t ed Leases, eases, Loan oa Receivables ece ab es aand d Investment in Securities 874 7 874.7 67
Slide 35: Appendix(11) Reconciliation Table of Non-GAAP Financial Measurement
Appendix(11) Reconciliation Table of Non-GAAP Financial Measurement (JPY Bn) B ) Consolidated Corporate Investment Maintenance Overseas Segment Financial Segment Profit Details Financial Real Estate and Retail Total Leasing Business Total Statement Services Operations Adjustment Base Profits *1 26.1
Slide 36: Reference Data
Reference e e e ce Data ata Copyright © 2014 ORIX Corporation All rights reserved. 35
Slide 37: Macro Economic Indicators
Macro Economic Indicators National CPI (Ex Fresh Food) Trends in Machineryy Orders (YoY Change) (Indicator of Capital Expenditure) *Volatile orders: Orders from ships and electric power companies. Source: Bloomberg g Source: Cabinet Office,, Government of Japan p Copyright © 2014 ORIX Corporation Al
Slide 38: Japanese Corporate Indices
Japanese Corporate Indices Corporate Bankruptcies Tankan Corporate (Q t l Basis) (Quarterly B i ) Diffusion Index Source: Teikoku Databank Databank, Ltd Ltd. Source: Bank of Japan Copyright © 2014 ORIX Corporation All rights reserved. 37
Slide 39: Japanese Real Estate Indicators
Japanese Real Estate Indicators Japan TSE REIT Index Office Rental Rates Source: Tokyo y Stock Exchange g Source: CBRE Copyright © 2014 ORIX Corporation All rights reserved. 3838
Slide 40: Other Domestic Indicators
Other Domestic Indicators Trend in Domestic Supply of Domestic Shipping Amount of Solar Cell Renewable Energy （Primary Energy Supply Basis） Source: Agency g y for Natural Resources and Energy gy Source: Japan p Photovoltaic Energy gy Association Copyright © 2014 ORIX Corporation All rights reserved.
Slide 41: Other Domestic Indicators
Other Domestic Indicators The number of M&A The number of the New Listed Companies Source: RECOF Corporation Source: Tokyo Stock Exchange Copyright © 2014 ORIX Corporation All rights reserved. 4040
Slide 42: Other Domestic Indicators
Other Domestic Indicators Retail Life Insurance Consumer Finance Loans Source: Japan Statistics Bureau Source: Japan Financial Services Agency Copyright © 2014 ORIX Corporation All rights reserved. 4141
Slide 43: Disclaimer
Disclaimer These materials have been prepared by ORIX O Corporation C (“O (“ORIX” or the “Company”) “C ) solely ffor your information f and are subject to change without notice. The information contained in these materials has not been independently verified and its accuracy is not guaranteed. No
Slide 44: Additional Information
Additional Information For annual and more historical data please access our website. A list of major disclosure materials is given below. ORIX W Website: b it URL: htt URL http://www.orix.co.jp/grp/en/ // i j / / / IR Website: URL: http://www.orix.co.jp/grp/en/ir/ If you would ld like lik tto b be