Orix Corporation · TSE:8591
Orix — Q4 2020 Earnings Presentation
33 slides from Orix's earnings presentation, May 22, 2020
Slide 1: Consolidated Financial Results for the Fiscal Year Ended March 31, 2020
ORIX Corporation Consolidated Financial Results For the Consolidated Fiscal Year Ended March 31, 2020 Makoto Inoue Member of the Board of Directors Representative Executive Officer President & CEO May 22, 2020 (TSE: 8591; NYSE: IX) 1 Company Name Copyright © 2020 ORIX Corporation All rights reserved
Slide 2: Overview (1) Net Income / ROE
Overview（1）Net Income / ROE ✓ 302.7 JPY Bn in net income, down by 6.5% YoY. ROE at 10.3% ✓ 417.7 JPY Bn in segment profits, up by 4.1% YoY Net Income* and ROE 350.0 （JPY14.0% Bn） 11.7% 12.1% 11.6% 11.3% 10.3% 300.0 12.0% 250.0 10.0% 200.0 8.0% 150.0 313.1 323.7 302.7 6.0% 260.2 273.2 100.0 4.0% 50.0
Slide 3: Overview (2) Breakdown of Segment Profits
Overview（2） Breakdown of Segment Profits FY 20.3 277.9 JPY Bn down by 5.5％ (-16.2 JPY Bn) Segment Profits Base Profits Positive contribution from new investments (NXT Capital, Avolon). Corporate financial service’s profits decreased YoY. 417.7 JPY Bn up by 4.1% YoY Investment Gains* 139.8 JPY Bn up
Slide 4: Overview (3) Segments Highlight
Overview（3） Segments Highlight Segment Profits Segment Profits Segment Assets ROA(%) (JPY Bn) JPY bn Highlight YoY YTD YTD(%) 417.7 •Profits decreased mainly due to a reduction in agency fee income from life 401.4 14.6 Corporate Financial 14.6 948.3 1.1 insurance brokerage for corporate customers 25
Slide 5: Overview (4) The Impact of the COVID-19 Outbreak in Q4
Overview（4） The Impact of the COVID-19 Outbreak in Q4 ✓ About 15.0~20.0 JPY Bn loss due to market fluctuation and occupancy rate decline at operating facilities ✓ The impact from airport concession business will be recorded from FY21.3 Q1, and aircraft leasing business had no impact during FY 20.3 Q
Slide 6: FY20.3 Performance
FY20.3 Performance ✓ Pre-tax profits 412.6 JPY Bn (+4.3% YoY), Net income 302.7 JPY Bn (-6.5% YoY) Achieved net income target 300 JPY Bn announced in the interim results ✓ ROE 10.3% Aim to achieve ROE of 11% or higher for mid-term ✓ Maintain A credit rating and higher Upgraded to AA- at R&I in Febru
Slide 7: Liquidity
Liquidity ✓ Maintain high long-term debt ratio (93% at the end of FY20.3) ✓ Liquidity exceeds the total amount of capital market funding and debt with due date within one year Breakdown of Funding and Trend in Long-term Debt Ratio* Liquidity and Debt within a Year (JPY Tn) *Excluding deposits 7.0 10
Slide 8: Stress Test of Liquidity
Stress Test of Liquidity ✓ No concern over current funding environments. Even with stressed assumptions and possible 500 JPY Bn worth new investments and/or lending, the liquidity at the end of FY21.3 still exceeds 600 JPY Bn ✓ Prioritizing liquidity management, while controlling the pace of new inv
Slide 9: The Impact of COVID-19
The Impact of COVID-19 ✓ Returning to usual profit level may take time even the major impact from the pandemic is over. Business Department Current Situation/ Action ✓ Occupancy rate of hotels and inns is declining significantly due to Profits from operating business not to be Real estate; declining
Slide 10: Our View for FY21.3
Our View for FY21.3 ✓ Major battle against COVID-19 may not conclude in the 1H both in Japan and the rest of the world If the situation gradually normalizes by the end of Q3, the net income is estimated at about 180.0 ~ 200.0 JPY Bn If the situation continues until the end of this fiscal year, the n
Slide 11: Mid to Long-term Direction
Mid to Long-term Direction Announced in October 2019 Basic Concepts Continue Growth Realize profits at the right time after adding value to the existing investments. Maintain the ROE target 11% or higher for medium to long term Never Miss Business Opportunities We will not miss business opportunitie
Slide 12: Mid to Long-term Direction
Mid to Long-term Direction ✓ORIX’s business environment and customer needs may change in the aftermath of COVID-19 ✓Allocation of funds and capital will be determined by taking all stakeholders including business partners and employees into consideration Seize new opportunity generated by the market
Slide 13: Shareholders Return
Shareholders Return ✓ Full year dividend at 76 yen per share in FY20.3, payout ratio at 32%. Interim dividend forecast in FY21.3 is 35 yen ✓ Raise the payout ratio to 50% for FY21.3 only. ✓ Consideration of the share repurchase after the COVID-19 crisis Dividend and Payout Ratio （JPY） Interim Divide
Slide 14: Summary
Summary FY21.3 net income was 302.7 JPY Bn (-6.5% YoY), ROE10.3% Pre-tax profit was up by 4.3％ YoY. No change in Basic Concepts for management However, a more cautious approach is merited for the time being. Allocation of funds and capital will be determined by taking all stakeholders including busi
Slide 15: Segment Performance
Segment Performance Copyright © 2020 ORIX Corporation All rights reserved. 15
Slide 16: Segment Performance (1) Corporate Financial Services
Segment Performance（1） Corporate Financial Services *As the figures less than 0.1 JPY Bn are rounded off, the total of individual business unit figures does not necessarily match the segment figures Segment Profits: 14.6 JPY Bn YoY -10.9 JPY Bn (-43％) Segment Assets: 948.3 JPY Bn YTD -11.5 JPY Bn (-
Slide 17: Segment Performance (2) Maintenance Leasing
Segment Performance（2）Maintenance Leasing Segment Profits: 33.7 JPY Bn YoY -5.1 JPY Bn (-13％) Segment Assets: 889.6 JPY Bn YTD +15.8 JPY Bn (+2％) ✓ Revenues from both Auto and Rentec increased ✓ IT-related rental assets increased ✓ SG&A increased due to improved customer service which hurt profits ✓
Slide 18: Segment Performance (3) Real Estate
Segment Performance（3） Real Estate Segment Profits: 76.9 JPY Bn YoY -12.4 JPY Bn (-14％) Segment Assets: 749.7 JPY Bn YTD +29.5 JPY Bn (+4％) ✓ Gains on sales from ORIX Living in Q2 ✓ Assets decreased due to some selling while new investments continue ✓ Profits in construction works at Daikyo increase
Slide 19: Segment Performance (4) Investment and Operation
Segment Performance（4） Investment and Operation Segment Profits: 55.7 JPY Bn YoY +17.5 JPY Bn (+46％) Segment Assets: 847.1 JPY Bn YTD +113.5 JPY Bn (+16％) ✓ Two gains on sales in private equity investment posted. ✓ Two new investments and two exits in private equity investment in Japan Concession pe
Slide 20: Segment Performance (5) Retail
Segment Performance（5）Retail Segment Profits: 80.4 JPY Bn YoY -3.8 JPY Bn (-5％) Segment Assets: 4,183.9 JPY Bn YTD +612.5 JPY Bn (+17％) ✓ Life insurance premiums increased but investment return decreased In life ✓ Investment in securities at life insurance business increased insurance (9.1 JPY Bn lo
Slide 21: Segment Performance (6) Overseas Business
Segment Performance（6） Overseas Business Segment Profits: 156.4 JPY Bn YoY +31.0 JPY Bn (+25%) Segment Assets: 3,287.4 JPY Bn YTD +148.5 JPY Bn (+5％) ✓ Profit from new investments in FY19.3 (NXT Capital, Avolon) ✓ Installment loans at OCU and aircraft operating lease assets increased ✓ In OCE, sales
Slide 22: Appendix
Appendix Copyright © 2020 ORIX Corporation All rights reserved. 22
Slide 23: 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 24: 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. 24
Slide 25: 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 4% 8% Corporate Financial Finance and fee business Services 38% Segment Profits 18% Automobile leasing and rentals, car-sharing; 417.7 JPY Bn Maintenan
Slide 26: About ORIX: Global Network
About ORIX Global Network ✓ Using its expertise cultivated in Japan, ORIX has expanded its business globally, with operations in 37 countries and regions worldwide Copyright © 2020 ORIX Corporation All rights reserved. 26
Slide 27: 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 Mar 31, 2020 3.00% 60% 2.00% 40% 1.00% 20% CP 0.3% 0.00% 0% 16.3
Slide 28: 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) 7 Total ORIX Corporation 6 Shareholders’ Equity 2.5× 2.3× 2.3× 5 2.2× 2.2× Deposits 1.9× 4 1.7× 1.6× Short- and Long-Term Debt 1.5× 1.5× 3 （Excluding Deposits) Debt-to-
Slide 29: Capital Allocation
Capital Allocation ✓ Employed capital ratio: the ratio shows the usage percentage of ORIX shareholders’ equity. Continue to aim growth controlling risks and returns. Shareholders’ Equity/ Capital Allocation Employed Capital Ratio （JPY Bn） 3,000.0 100% 2,500.0 88% 85% 15% 13% 85% 85% 78% 2,000.0 80%
Slide 30: Performance in Three Categories
Performance in Three Categories See P.31 for details on the three categories Segment Profits Finance Operation Investment （JPY Bn） （JPY Bn） Financial Services Environment/Infrastructure （JPY Bn） Japan Overseas ROA (after-tax) Maintenance Services Others Fixed Income Tangible Assets Equity ROA (after
Slide 31: Business Portfolio in Three Categories
Business Portfolio in Three Categories Finance Operation Investment Main Risk Credit risk Operation/Business risk Market risk Category Capital Requirement Low Medium-High High Environment/ Financial Maintenance Fixed Tangible Japan Overseas Others Equity Infrastructure Services Services Income Asset
Slide 32: 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 33: ORIX Corporation
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,