Orix Corporation · TSE:8591
Orix — Q2 2021 Earnings Presentation
48 slides from Orix's earnings presentation, Nov 2, 2020
Slide 1: Second Quarter Consolidated Financial Results
ORIX Corporation Second Quarter Consolidated Financial Results For the Six-Month Period Ended September 30, 2020 Makoto Inoue Member of the Board of Directors Representative Executive Officer President & CEO November 2, 2020 (TSE: 8591; NYSE: IX) 1 Company Name Copyright © 2020 ORIX Corporation All
Slide 2: Overview First Half Net Income / ROE
Overview First Half Net Income / ROE ✓ 93.8 JPY Bn in net income, down by 41.0% YoY. Annualized ROE at 6.3% ✓ 149.5 JPY Bn in segment profits, down by 38.0% YoY Net Income* and ROE Reference: ROE Trends for Past Five Years (JPY Bn) 15.0% 100 , 000 14.4% 13.2% 12.5% 14.3% 13.7% 11.9% 11.5% 12.3% 400.
Slide 3: Overview Breakdown of First Half Segment Profits
Overview Breakdown of First Half Segment Profits 112.8 JPY Bn down by 33％ (-54.6 JPY Bn) FY 21.3 H1 Base Profits Profits decreased in Real Estate (Facilities Operation), Concession, Aircraft Leasing. Segment Profits Meanwhile, Environment and Energy, Life Insurance, Banking, and Credit profits were
Slide 4: Overview Q2 Impact of COVID-19
Overview Q2 Impact of COVID-19 ✓ Negative COVID-19 impact expands in Aircraft Leasing and Concession, but other business units are recovering (Figures are based on segment profits) Impact Impact Business Background (Comparison to Q1) Amount (Q1) Amount (Q2) ① Real Estate Worst period of occupancy ra
Slide 5: Segment Performance Segment Profits
Segment Performance Segment Profits (JPY Bn) Segment Profits Q1 Q2 QoQ H1 YoY Highlight （JPY Bn） Corporate Financial Services QoQ profits increased on recovery in demand for rental cars and fee revenue 250.0 241.5 1 and Maintenance Leasing 10.2 14.7 4.5 24.9 -7.6 increase in Corporate Financial Serv
Slide 6: Segment Performance Segment Assets
Segment Performance Segment Assets Segment Assets (JPY Bn) （JPY Bn） 21.3 ROA YTD (annualized and Highlight 10,883.5 10,899.7 H1 after-tax) Corporate Financial Services 1 1,709.9 -79.8 2.0% Gradual reduction of financial assets and Maintenance Leasing 1,789.7 1,709.9 2 Real Estate 827.3 6.1 1.7% ー 82
Slide 7: Financial Soundness
Financial Soundness Funding Structure / Employed Capital Ratio ✓ Funding structure: Diversified funding methods and maintained a high ratio of long-term debt ✓ Employed Capital Ratio: Illustrates the ratio of capital employed to ORIX shareholders’ equity Continue to pursue growth while controlling r
Slide 8: FY21.3 Forecast & Shareholder Return
FY21.3 Forecast & Shareholder Return ✓ FY21.3 net income forecasted at 190.0 JPY Bn. Expect stable earnings despite impact from COVID-19 ✓ For this fiscal year, full-year dividend of 76 JPY per share or 50% payout ratio, whichever is higher ✓ Resumption of buyback program approved in FY20.3 (44.2 JP
Slide 9: Credit Ratings / Liquidity
Credit Ratings / Liquidity ✓ S&P, Moody’s, Fitch all maintained A- ratings. R&I is AA- ✓ Aim to build more robust portfolio through M&A, asset replacement ✓ Ratings may change depending on timing of investments or asset sales, but we will maintain financial soundness commensurate with an ‘A’ rating
Slide 10: COVID Impacted Businesses (1) Real Estate, Concession, MICE-IR, Other
COVID Impacted Businesses (1) Real Estate (Facilities Operation), Concession, MICE-IR, Other ✓ Real Estate (Facilities Operation), Concession businesses recovering ✓ No change in original plan for MICE-IR Business Current Status ✓ All accommodation facilities closed during lockdown, now all but one
Slide 11: COVID Impacted Businesses (2) Aircraft Leasing
COVID Impacted Businesses (2) Aircraft Leasing ✓ 40+ years of experience will be leveraged to effectively manage the business Current Status ・85% narrow-body fleet (market fluctuation smaller) ・Most of the lessee airlines that were granted deferrals in Q1 have resumed payment ORIX ・Lessee portfolio
Slide 12: New Investments
New Investments ✓ Approx. 200 JPY Bn in new investments announced Company Overview India’s leading renewable energy operator Environment and Energy Greenko Energy （Operating capacity: 4.4GW, Under development: 8GW） US’ largest LIHTC syndicator Asset Management Boston Capital (ORIX USA’s real-estate
Slide 13: Outlook Beyond FY21.3
Outlook Beyond FY21.3 ✓ Net income: Aim to quickly return to 300 JPY Bn and achieve 400 – 500 JPY Bn in medium to long term, through portfolio replacement and new investments ✓ ROE: Aim to achieve 11% or higher in medium to long term 600 ROE 15.0% 550 10.3% 10.0% New New investments investments 500
Slide 14: Support for TCFD
Support for TCFD ✓ ORIX announced its support for TCFD (Task Force on Climate-related Financial Disclosures) in Oct 2020 Date Sustainability Initiatives Established Sustainability Team within Corporate (1) ORIX recognizes that addressing climate change is an 2019/7 Planning Department important cons
Slide 15: Segment Performance
Segment Performance Copyright © 2020 ORIX Corporation All rights reserved. 15
Slide 16: (blank)
(blank) Copyright © 2020 ORIX Corporation All rights reserved. 16
Slide 17: Segment Performance (1) Corporate Financial Services and Maintenance Leasing
Corporate Financial Services and （1） Maintenance Leasing *As figures less than 0.1 JPY Bn are rounded off, the total of Segment Performance individual business unit figures does not necessarily match segment figures H1 Segment Profits: 24.9 JPY Bn YoY -7.6 JPY Bn (-23％) Segment Assets: 1,709.9 JPY B
Slide 18: Corporate Financial Services and Maintenance Leasing
Corporate Financial Services and Maintenance Leasing Main business: Finance and fee business; leasing and rental of automobiles, electronic measuring instruments and IT-related equipment; Yayoi Segment Assets NET* Segment Revenue Broad array of products and services （as of March 31, 2020） （FY 20.3）
Slide 19: Segment Performance (2) Real Estate
Segment Performance（2） Real Estate H1 Segment Profits: 10.4 JPY Bn YoY -37.1 JPY Bn (-78％) Segment Assets: 827.3 JPY Bn YTD +6.1 JPY Bn (+1%) ✓ RE Investment and Facilities Operation: Segment profit up QoQ as accommodation ✓ Asset growth flat facilities (hotels, inns) resumed operation. Timely sale
Slide 20: Real Estate
Real Estate Main Business：Real estate development, rental and management; facility operations; real estate asset management Segment Assets Unrealized gains on rental Segment Asset Trends properties* （as of March 31, 2020） (JPY Bn) (JPY Bn) 2500 90 35.0% 82.8 30.1% 80 30.0% 73.7 71.9 70.1 23% 2000 1,
Slide 21: Segment Performance (3) PE Investment and Concession
Segment Performance（3） PE Investment and Concession H1 Segment Profits: 4.1 JPY Bn YoY -15.6 JPY Bn (-79％) Segment Assets: 322.6 JPY Bn YTD +0.1 JPY Bn (flat) ✓ PE investment: Segment profits remained steady ✓ PE investment: One new investment in Q1*1, one new investment planned for Q3*2 (However, p
Slide 22: PE Investment and Concession
PE Investment and Concession ✓ Currently invested in 14 companies (as of end-Sep 2020); aim to create a new business segment for ORIX Investment Track Record What makes us unique? Leveraging our broad network and ORIX has not only sufficient funding ability but also possesses significant experience,
Slide 23: Segment Performance (4) Environment and Energy
Segment Performance（4） Environment and Energy H1 Segment Profits: 14.1 JPY Bn YoY +5.6 JPY Bn (+66％) Segment Assets: 478.2 JPY Bn YTD -0.6 JPY Bn (flat) ✓ Solid performance despite COVID-19 impact ✓ Asset growth flat ✓ Reached basic agreement to acquire more than 20% of Greenko Energy’s ✓ Valuation
Slide 24: Environment and Energy
Environment and Energy Main Business: Domestic and overseas renewable energy; electric power retailing; ESCO services; sales of solar panels and electricity storage system; recycling and waste management （as of September 30, 2020） Segment Assets Major Investment Overseas（Renewable Energy） （as of Mar
Slide 25: Segment Performance (5) Insurance
Segment Performance（5）Insurance H1 Segment Profits: 34.7 JPY Bn YoY +8.8 JPY Bn (+34％) Segment Assets: 1,710.4 JPY Bn YTD +130.3 JPY Bn (+8％) ✓ Posted steady profits despite COVID-19 ✓ Investment securities increased in Life Insurance ✓ Non-face-to-face sales channels made positive contribution Segm
Slide 26: Life Insurance
Life Insurance • Offer simple and easy-to-understand products and affordably priced insurance • Optimal products aligned with evolving customer needs • Omnichannel strategy utilizing four sales channels - agency, banks and other financial institutions, mail order and Internet sales, and ORIX Life re
Slide 27: Segment Performance (6) Banking and Credit
Segment Performance（6）Banking and Credit H1 Segment Profits: 24.2 JPY Bn YoY +5.5 JPY Bn (+29％) Segment Assets: 2,676.6 JPY Bn YTD +72.9 JPY Bn (+3％) ✓ Banking: Profits remain steady due to accumulation of high-quality assets ✓ Banking: Captured demand for real estate investment loans utilizing non-
Slide 28: Banking and Credit
Banking and Credit • Banking: ORIX Bank offers distinctive products and services such as real estate investment loans, card loans, trust products and investment trusts Our low fixed-cost business model entails no retail branches, ATMs, or settlement services • Credit : ORIX Credit operates in three
Slide 29: Segment Performance (7) Aircraft and Ships
Segment Performance（7） Aircraft and Ships H1 Segment Profits: 4.7 JPY Bn YoY -12.1 JPY Bn (-72%) Segment Assets: 568.9 JPY Bn YTD -16.4 JPY Bn (-3%) ✓ ORIX aircraft-related business: Profits decreased on drop in lease revenue, ✓ Excluding FX impact of -15.4 JPY Bn, segment assets remained flat inves
Slide 30: Aircraft Leasing Business
Aircraft Leasing Business GLOBALLY NARROWBODY OEM DIVERSE WEIGHTING BREAKDOWN Owned Committed ORIX （NBV） （number of aircraft） （number of aircraft） fleet fleet 72 0 16% 15% Average age 33% 5.9 years 46% 54% Remaining Managed fleet lease term 135 85% 6.8 years 51% APAC Narrowbody Airbus Americas EMEA
Slide 31: Segment Performance (8) ORIX USA
Segment Performance（8） ORIX USA H1 Segment Profits: 11.4 JPY Bn YoY -24.5 JPY Bn (-68%) Segment Assets: 1,294.2 JPY Bn YTD -79.8 JPY Bn (-6％) ✓ Profits improved substantially QoQ owing to lower credit losses and improvement ✓ AUM increased steadily (announced acquisition of Boston Capital’s low-inco
Slide 32: ORIX USA
ORIX USA Main Business: Finance, investment and asset management in the Americas Segment Assets NET* Segment Revenue （as of March 31, 2020） （FY 20.3） ・Leveraged loan ・Real estate finance loan ・Leveraged loan 20% and others ・Real estate finance loan 17% Other and others Other ＊NET Segment Revenue = 5
Slide 33: Segment Performance (9) ORIX Europe
Segment Performance（9） ORIX Europe H1 Segment Profits: 16.3 JPY Bn YoY -0.4 JPY Bn (-2%) Segment Assets: 318.7 JPY Bn YTD +0.8 JPY Bn (flat) ✓ Profits increased QoQ on a recovery in AUM ✓ AUM increased moderately with market recovery ✓ Enjoyed improved mix shift with several mandates won Segment Pro
Slide 34: ORIX Europe
ORIX Europe Main Business: Equity and fixed income asset management AUM* Major Asset Management Businesses （EUR Bn） Established Head Office Primary Business (Acquired) 290.5 288.7 294.5 280.6 262.5 259.9 Stocks, bonds, and 1929 Robeco Rotterdam investment solutions （2013） 232.8 210.8 1995 Boston Par
Slide 35: Segment Performance (10) Asia and Australia
Segment Performance（10） Asia and Australia H1 Segment Profits: 4.6 JPY Bn YoY -14.6 JPY Bn (-76%) Segment Assets: 992.9 JPY Bn YTD -17.3 JPY Bn (-2%) ✓ Base profits at local business units were solid, despite impairment of PE ✓ Excluding FX impact of +18.3 JPY Bn, segment assets decreased 35.7 JPY B
Slide 36: Asia and Australia
Asia and Australia Main Business: Finance and investment businesses in Asia and Australia Major Subsidiaries（Asia and Australia） Country Company Name Primary Business Established Segment Assets NET* Segment Revenue (Region) (as of March 31, 2020) （FY 20.3） Leasing, Automobile ORIX Asia Limited Hong
Slide 37: Appendix
Appendix Copyright © 2020 ORIX Corporation All rights reserved. 37
Slide 38: About ORIX Proven Track Record of Profitability
About ORIX Proven Track Record of Profitability ✓ ORIX has achieved 55 years of sustained, profitable growth (JPY Bn) Net Income Attributable to ORIX Corporation Shareholders 350 300 250 FY2009.3 FY2002.3 Burst of IT bubble Global financial crisis 200 FY1998.3 150 Asian currency crisis FY1993.3 Burs
Slide 39: About ORIX Expertise in Business and Collective Capabilities
About ORIX Expertise in Business and Collective Capabilities of the Group ✓ ORIX will continue to enhance our expertise in finance and tangible assets as we synergistically expand our businesses Copyright © 2020 ORIX Corporation All rights reserved. 39
Slide 40: About ORIX Profits and Assets by Segment
About ORIX Profits and Assets by Segment ✓ Individual businesses demonstrate their strengths to the maximum extent possible to bring about synergies Corporate Financial Services Finance and fee business; leasing and rental of automobiles, electronic measuring 3% instruments and IT-related equipment;
Slide 41: About ORIX Global Network
About ORIX Global Network ✓ Using its expertise cultivated in Japan, ORIX has expanded its business globally, with operations in 34 countries and regions worldwide Copyright © 2020 ORIX Corporation All rights reserved. 41
Slide 42: Financials (1) Funding Structure
Financials (1) Funding Structure ✓ Diversified funding. Controlled costs while maintaining a high long-term debt ratio Breakdown of Funding Trend in Funding Costs and Long-term Debt Ratio* *Excluding deposits 5.00% 100% 4.00% 80% As of Sep 30, 2020 3.00% 60% 2.00% 40% 1.00% 20% CP 0.2% 0.00% 0% 16.3
Slide 43: Financials (2) Debt-to-Equity Ratio
Financials (2) Debt-to-Equity Ratio ✓ Debt-to-Equity Ratio continuously stays at a low level Trend in Debt-to-Equity Ratio (JPY Tn) 8 Total ORIX Corporation 7 Shareholders’ Equity 2.5× 6 2.3× 2.3× 2.3× Deposits 2.2× 2.2× 5 1.9× 1.7× Short- and Long-Term Debt 1.6× 1.6× 4 1.5× 1.5× （Excluding Deposits
Slide 44: Financials (3) Bond Maturity Ladder
Financials (3) Bond Maturity Ladder ✓ Leveled out annual redemption amounts by dispersing bond maturities Maturity Ladder (As of Sep 30, 2020) (JPY Bn) 150 Matured 100 ORIX Domestic Bond for Institutional Investors * ORIX Domestic Bond for Retail Investors 50 ORIX Overseas Bond / Local Subsidiary Bo
Slide 45: Business Portfolio in Three Categories
Business Portfolio in Three Categories Finance Operation Investment Main Risk Credit risk Operation/Business risk Market risk Categories Capital Requirement Low Medium-High High Environment/ Japan Overseas Financial Services Maintenance Services Others Fixed Income Tangible Assets Equity Infrastruct
Slide 46: Shareholder Return
Shareholder Return ✓ For this fiscal year, full-year dividend of 76 JPY per share or 50% payout ratio, whichever is higher ✓ Resumption of buyback program approved in FY20.3 (44.2 JPY Bn remaining of 100.0 JPY Bn) Dividend per Share and Payout Ratio Share Buyback and Total Return Ratio （JPY） （JPY Bn
Slide 47: Disclaimer
Disclaimer ◼ These materials have been prepared by ORIX Corporation (“ORIX” or the “Company”) solely for your information 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 representations,
Slide 48: ORIX Corporation IR contact
For the current IR materials and archives of past financial data, please access our website. IR Section https://www.orix.co.jp/grp/en/ir/ IR Library https://www.orix.co.jp/grp/en/ir/library/ ORIX Corporation Corporate Planning Department World Trade Center Building, 2-4-1, Hamamatsu-cho, Minato-ku,