Orix Corporation · TSE:8591
Orix — H1 FY2014.3 Earnings Presentation
51 slides from Orix's earnings presentation, Oct 31, 2013
Slide 1: Second Quarter Consolidated Financial Results
ORIX Corporation p (TSE: 8591; NYSE: IX) Consolidated Financial Results Second Quarter Consolidated Financial Results For the Six Month Period Ended April 1 – September 30 30, 2013 October 31, 2013 Copyright © 2013 ORIX Corporation All rights reserved.
Slide 2: Performance: Overview
Performance: Overview Achieved 80.4bn in Net Income, up 34% YoY Net Income target revised upward from 135bn to 145bn Net Income* and ROE (JPY Bn) 150 9.5% 145 0 145.0 120 7.4% 6.2% 90 5.1% 135.0 60 111.9 83.5 80.4 30 66.0 0 11.3 12.3 13.3 14.3 14.3 First Half （Target） *Net Income refers to Net I
Slide 3: Performance: Segment Profits and Assets
Performance: Segment Profits and Assets Increased profits in 5 segments by steadily and nimbly capturing g in the environment changes Segment Profits Segment Assets (JPY Bn) (JPY Bn) 140 7,000 2.4% Corporate Financial 120 1.9% Services 6,000 1.5% Maintenance Leasing 100 1 1% 1.1% 5,000 Real Estate
Slide 4: Performance: Service Related Revenues
Performance: Service Related Revenues Significant increase of service related revenues driven by Robeco acquisition and progress in “Finance + Services” Service Related Revenues/ Percentage within Base Revenues ((JPY Bn)) 200 70% Corporate Financial Services Maintenance Leasing 150 60% Real Estate
Slide 5: Performance: Segment Profits
Performance: Segment Profits (JPY Bn) Corporate Financial Services Maintain 900bn in assets, expect fee income to expand in the second half Service related revenues 15 Segment Assets ROA (After Tax) Base Profits Segment Profits Interest related revenues 1,000 1.6% 1.5% 12 800 9 600 46% 6 54% 400 3 2
Slide 6: Performance: Segment Profits
Performance: Segment Profits (JPY Bn) Real Estate 1tn in assets within range, achieved 1% ROA Segment Assets ROA (After Tax) Service related revenues 20 Base Profits Segment g Profits 1 500 1,500 Inte est related Interest elated revenues e en es 1.0% 15 1,000 13% 10 500 0.3% 5 87% 0 0 14 3 1H 14.3 1
Slide 7: Performance: Segment Profits
Performance: Segment Profits (JPY Bn) Retail Reached 2tn in assets, strong launch of new life insurance product Base Profits Segment Profits Service related revenues 30 Segment Assets ROA (After Tax) Interest related revenues 2,500 25 1.7% 1.6% 20 2,000 15 1,500 39% 10 1,000 61% 5 500 0 0 13 3 1H 13
Slide 8: Performance: Robeco
Performance: Robeco AUM is stable even after acquisition announcement, steady fee revenues Asset Under Management -3 8 18 1 (€bn) 200 Net New Money 150 94 97 Institutional AUM 69 72 100 Retail AUM 50 92 103 81 78 0 10 12 10.12 11 12 11.12 12 12 12.12 13 9 13.9 10.12 11.12 12.12 13.9 Net Fee Revenu
Slide 9: Financials: Changing Balance Sheet Structure
Financials: Changing Balance Sheet Structure Improving profitability while strengthening financial soundness (Percentage of (ROA) （JPY Bn） Real Estate) 10,000 , Real Estate Segment Others excl. Real Estate 40% Percentage of Real Estate Segment Asset ROA 8,000 30% 6,000 20% 4,000 10% 2,000 0 0% 07
Slide 10: 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 First Half Copyright © 2013 ORIX Corporation All rights reserved. 9
Slide 11: Financials: Status of Shareholders' Equity
Financials: Status of Shareholders’ Equity Ratio of employed capital close to 80% after Robeco acquisition Capital deployment status change in conjunction with portfolio turnover Employed Capital Ratio and ROE Breakdown of Deployed Capital (JPY Bn) 2,000 9.5% 10.0% Corporate Financial Services/
Slide 12: 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 Sep Sep. 30 2013 / Excl Excl. ABS ABS, CMBS) （Excl. ABS, CMBS for Fu
Slide 13: 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% 314% 295% Available Commitment Line(1) 204% Cash and Cash Equivalents(1) 1,000 CP (2) 500 Current Redemptions（Bond, MTN）(2) Liquidity Coverage Rati
Slide 14: Financials: ALM
Financials: ALM Minimal impact from interest rate fluctuation due to limited mismatch in interest rate positions Mismatch in Interest Rate Positions （JPY Bn） Assets and liabilities reaching maturity/re-pricing dates within a year （JPY Bn） 4,000 Difference 56.6Bn 130.5Bn 35.6Bn 13.3 3,500 Cash and
Slide 15: Financials: Bond Issuances / Maturity Ladder
Financials: Bond Issuances / Maturity Ladder Promote lengthened maturities by actively issuing bonds with more than 5 year term Term Issued Amount Issued to Coupon p T Spread p (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 Reta
Slide 16: 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） 12 9 12.9 13 3 13.3 13 9 13.9 90 1 3% 1.3% Corporate Loans individually evaluated 1.
Slide 17: Strategy: Towards 10% ROE
Strategy: Towards 10% ROE Segment Asset ROA: 1.9% in 1H FY13.3 → 2.4% in 1H FY14.3 Make the next move towards 2.5% ROA ROA（After Tax） Change in Segment Profits, Assets and ROA 8% FY14.3 Investment and Operation First Half 6% FY13.3 First Half Maintenance Leasing Overseas Business • Diameter of t
Slide 18: Strategy: Environment and Energy Business
Strategy: Environment and Energy Business Solar panel sales expected to drive profit until FY15.3 Dramatic increase in assets driven by mega-solar operations and expansion of investment Environment and Energy Business Scale of Each Business* Asset Balance (JPY Bn) Solar Panel Sales 300 （MW） Geot
Slide 19: Strategy: Environment and Energy Business
Strategy: Environment and Energy Business Capture wide-range of opportunities from energy to environmental field Copyright © 2013 ORIX Corporation All rights reserved. 18
Slide 20: Strategy: Summary
Strategy: Summary Achieved 80.4bn in Net Income,, 9.5% ROE ((annualized basis)) Net Income target revised upward to 145bn Aim for 10% ROE by improving ROA Copyright © 2013 ORIX Corporation All rights reserved. 19
Slide 21: Appendix
Appendix pp Copyright © 2013 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 s
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 Not as ambitious as to call it a globalization globalization, but rather it is a way of eliminating barriers that exist in Japan” 34 Countries and R
Slide 25: Appendix(1) Trend in Performance
Appendix(1) Trend in Performance (JPY Bn) 13.3 14.3 12.3 13.3 First Half First Half Total Revenue 968.9 1,064.5 508.5 614.1 Net Income *1 83.5 111.9 59.8 80.4 Segment Assets 6,123.9 6,382.7 6,226.3 6,748.8 T t l Assets Total A t 8 332 8 8,332.8 8 439 7 8,439.7 8 186 5 8,186.5 8 430 0 8,430.0 Shareho
Slide 26: Appendix(2) Profit by Segment
Appendix(2) Profit by Segment (JPY Bn) 13.3 14.3 12.3 13.3 Change First Half First Half Corporate Financial Services 21.5 24.8 11.8 10.8 92% Maintenance Leasing 34.7 36.1 17.8 21.1 119% Real Estate 1.3 5.6 3.0 8.8 294% Investment and Operation 16.0 34.9 16.4 22.2 135% Retail 19.4 43.2 23.6 28.4 120%
Slide 27: Appendix(3) Assets by Segment & Region
Appendix(3) Assets by Segment & Region 14.3 12.3 13.3 (JPY Bn) First Half Corporate Financial Services 899.3 893.2 895.1 Maintenance Leasing 538 1 538.1 599 4 599.4 634 7 634.7 Real Estate 1,390.5 1,133.2 1,045.5 Investment and Operation 471.9 444.3 434.2 Retail 1 742 9 1,742.9 1 994 1 1,994.1 2 056
Slide 28: Appendix(4) Segment Performance: Corporate Financial Services
Appendix(4) Segment Performance 1. Corporate Financial Services 13.3 14.3 （JPY Bn） 12.3 13.3 Change First Half First Half Base Profits 24.5 24.8 11.9 10.0 84% Capital Gains 0.3 0.2 0.2 0.5 - Provisions -2.3 -0.1 -0.3 0.4 - p Impairments -1.1 -0.1 -0.1 0.0 - Segment Profits 21.5 24.8 11.8 10.8 92% Se
Slide 29: Appendix(4) Segment Performance: Maintenance Leasing
Appendix(4) Segment Performance 2. Maintenance Leasing 13.3 14.3 （JPY Bn） 12.3 13.3 Change First Half First Half Base Profits 34.7 36.2 18.1 21.3 118% Capital Gains 0.1 0.1 0.0 0.0 - Provisions 0.0 -0.1 -0.3 -0.2 - p Impairments 0.0 -0.1 -0.1 0.0 - Segment Profits 34.7 36.1 17.8 21.1 119% Segment As
Slide 30: Appendix(4) Segment Performance: Real Estate
Appendix(4) Segment Performance 3. Real Estate 13.3 14.3 （JPY Bn） 12.3 13.3 Change First Half First Half Base Profits 18.3 25.0 12.3 14.0 113% Capital Gains 14.2 16.5 7.3 9.6 - Provisions -3.0 0.4 0.6 0.0 - p Impairments -28.2 -36.4 -17.3 -14.8 - Segment Profits 1.3 5.6 3.0 8.8 294% Segment Assets 1
Slide 31: Appendix(4) Segment Performance: Investment and Operation
Appendix(4) Segment Performance 4. Investment and Operation 13.3 14.3 （JPY Bn） 12.3 13.3 Change First Half First Half Base Profits 22.4 29.1 17.9 17.6 98% Capital Gains 5.3 19.0 4.8 6.7 - Provisions -7.5 -5.5 -1.6 -1.5 - p Impairments -4.2 -7.6 -4.7 -0.6 - Segment Profits 16.0 34.9 16.4 22.2 135% Se
Slide 32: Appendix(4) Segment Performance: Retail
Appendix(4) Segment Performance 5. Retail 13.3 14.3 （JPY Bn） 12.3 13.3 Change First Half First Half Base Profits 32.8 42.1 20.8 26.9 129% Capital Gains 0.3 3.7 3.4 3.0 - Provisions -1.1 -2.6 -0.5 -1.6 - p Impairments -12.7 0.0 0.0 0.0 - Segment Profits 19.4 43.2 23.6 28.4 120% Segment Assets 1,742.9
Slide 33: Appendix(4) Segment Performance: Overseas Business
Appendix(4) Segment Performance 6. Overseas Business 13.3 14.3 （JPY Bn） 12.3 13.3 Change First Half First Half Base Profits 40.4 37.5 15.1 27.0 179% Capital Gains 21.2 19.3 8.3 12.0 - Provisions -3.8 -2.4 -0.5 -2.0 - p Impairments -8.0 -1.6 -0.2 -2.7 - Segment Profits 49.8 52.8 22.7 34.2 151% Segmen
Slide 34: Appendix(5) Funding and Liquidity
Appendix(5) Funding and Liquidity 14.3 (JPY Bn) 12.3 13.3 First Half CP 180.4 151.5 100.0 B Borrowings i ffrom Financial Fi i l IInstitutions tit ti 2 277 3 2,277.3 2 368 0 2,368.0 2 458 4 2,458.4 Bonds / MTN 1,393.0 1,283.0 1,200.8 Deposits 1,103.5 1,078.6 1,109.6 Subtotal 4,954.3 , 4,881.1 , 4,868
Slide 35: Appendix(6) Real Estate Portfolio
Appendix(6) Real Estate Portfolio ■ Trend in Real Estate Segment Assets by Type (JPY Bn) 12.3 13.3 14.3 First Half Rental Property 876 3 876.3 754 4 754.4 718 6 718.6 Under Lease 705.9 603.4 595.4 Under Development 170.4 151.0 123.2 Condo Assets 87.3 55.4 43.3 NRL / Specified Bonds 205.4 113.4 * 69.
Slide 36: Appendix(6) Real Estate Portfolio
Appendix(6) Real Estate Portfolio ■ Rental Property Assets by Type (13.9) (JPY Bn) Under Lease Under Property p y Type yp Total B l Balance NOI Yield Yi ld Development Office Buildings 196.7 4.2% 63.5 260.2 Logistics Centers 34.7 5.7% 0.4 35.1 Commercial Facilities 138.7 6.5% 30.7 169.4 Rental Condo
Slide 37: Appendix(7) Robeco
Appendix(7) Robeco (JPY Bn) 14.3 First half Segment Profit 4.4 Segment Assets 328.9 ROA ((After Tax)) 3.3% 2012.1-12 * 2013.1-6 * 2013.7-9 End of Period AUM (Billions of euro) 188.9 192.5 197.1 Net New Money (Billions of euro) 18.4 0.8 0.1 NNM as % of BoP AUM 12 3% 12.3% 0 4% 0.4% 0 1% 0.1% Institut
Slide 38: Appendix(8) Asset Quality
Appendix(8) Asset Quality ■ Asset Quality (Adjusted **) (JPY Bn) 14.3 12.3 13.3 First Half Investment in Direct Financing g Leases 728.0 826.4 864.7 90+Days Past-Due Direct Financing Leases 17.4 15.8 14.9 Installment Loans 2,073.2 2,176.1 2,096.0 90+Days Past-Due Loans 8.6 7.7 7.3 Not individually E
Slide 39: 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 40: Appendix(9) Reconciliation Table of Non-GAAP Financial Measurement
Appendix(9) Reconciliation Table of Non-GAAP Financial Measurement (JPY Bn) 14.3 Key Ratio 12.3 13.3 First Half Total Assets （a） 8,332.8 , 8,439.7 , 8,430.0 , Deduct: Payables under Securitized Leases, Loan Receivables and Investment in Securities 874.7 679.8 360.8 Adjusted Total Assets （b） 7,458.1
Slide 41: Appendix(9) Reconciliation Table of Non-GAAP Financial Measurement
Appendix(9) Reconciliation Table of Non-GAAP Financial Measurement (JPY Bn) 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 24.5 34.7
Slide 42: Reference Data
Reference e e e ce Data ata Copyright © 2013 ORIX Corporation All rights reserved. 41
Slide 43: Macro Economic Indicators
Macro Economic Indicators National CPI (Ex Fresh Food) (YoY Change) Source: Bloomberg g Copyright © 2013 ORIX Corporation All rights reserved. 4242
Slide 44: Japanese Corporate Indices
Japanese Corporate Indices Corporate Bankruptcies Tankan Corporate (Q t l Basis) (Quarterly B i ) Diffusion Index Source: Teikoku Databank,, Ltd. p Source: Bank of Japan Copyright © 2013 ORIX Corporation All rights reserved. 43
Slide 45: Japanese Real Estate Indicators
Japanese Real Estate Indicators Japan TSE REIT Index Office Rental Rates Source: Tokyo y Stock Exchange g Source: CBRE Copyright © 2013 ORIX Corporation All rights reserved. 4444
Slide 46: Domestic Lease Business Indicators
Domestic Lease Business Indicators Private Equipment q p Investment New Car Sales Source: Japan p Leasing g Association Source: Japan p Automotive Leasing g Association Copyright © 2013 ORIX Corporation All rights reserved. 4545
Slide 47: 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 © 2013 ORIX Corporation All rights reserved.
Slide 48: 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 © 2013 ORIX Corporation All rights reserved. 4747
Slide 49: Other Domestic Indicators
Other Domestic Indicators Retail Life Insurance Consumer Finance Loans Source: Japan Statistics Bureau Source: Japan Financial Services Agency Copyright © 2013 ORIX Corporation All rights reserved. 4848
Slide 50: 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 51: 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