Orix Corporation · TSE:8591
Orix — Investor Presentation (March 2019)
24 slides from Orix's investor presentation, Mar 5, 2019
Slide 1: ORIX's Aviation Business Strategy
ORIX Corporation ORIX’s Aviation Business Strategy James Meyler ORIX Aviation Group CEO March 5, 2019 (TSE: 8591; NYSE: IX) 1 Company Name Copyright © 2019 ORIX Corporation All rights reserved.
Slide 2: ORIX Aviation – Investor Highlights
ORIX Aviation – Investor Highlights Established by ORIX Corporation in 1991 S&P Ranked Aircraft Lease Servicer Full Service Platform and Capabilities Proven track record of strong results Copyright © 2019 ORIX Corporation All rights reserved. 2
Slide 3: Industry Overview
Industry Overview 3 Company Name Copyright © 2019 ORIX Corporation All rights reserved.
Slide 4: Fleet Growth Forecast
Fleet Growth Forecast World fleet expected to double in the next 20 years Financing Forecast for Global Commercial Aircraft ▪ $143bn financing required for new aircraft in 2019 ▪ Lessors expected to provide 45-50% of this via direct orders and SLBs ▪ Airbus reports SLBs alone financed c. 30% of all
Slide 5: Current Market: Prospects for Future Growth
Current Market: Prospects for Future Growth ▪ In 2017, 30% of emerging country populations took a flight. ▪ Airbus anticipates global ‘middle class’ population to rise by 69% to 5.0 billion over next 20 years, and overall emerging market trips per capita to increase to 85% Ireland, 3.7 trips in 2017
Slide 6: Current Market: Strong Passenger Traffic
Current Market: Strong Passenger Traffic 2018 ASK growth (Demand) | 2018 RPK growth (Capacity) 5% Long Term Growth Trend in Passenger Numbers 5.0% | 6.3% 4.5% | 5.1% 8.7% | 9.7% 4.7% | 4.7% Financial Crisis 1.0% | 2.8% 6.1% | 6.4% Dotcom bubble / 9-11 Oil Crisis Gulf War Across the World 6.1% | 6.9%
Slide 7: Airlines Financial Performance Remains Strong
Airlines Financial Performance Remains Strong Industry Fuel Costs and Net Profits 50 250 40 200 30 20 Fuel Cost ($ billions) Profits ($ billions) 150 Profits ($ billions) (LHS) 10 Fuel cost ($ billions) (RHS) 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(F) -10 50
Slide 8: Aviation Leasing Market
Aviation Leasing Market Why Airlines Lease Aircraft 0.5% ▪ Concentrating on Core Business ▪ Access to Capital ▪ Access to Aircraft ▪ Fleet Flexibility ▪ Monetizing Tax Benefits Source: Boeing Copyright © 2019 ORIX Corporation All rights reserved. 8
Slide 9: ORIX Aviation Strategy
ORIX Aviation Strategy Copyright © 2019 ORIX Corporation All rights reserved.
Slide 10: ORIX Aviation: Timeline of Success
ORIX Aviation: Timeline of Success 2004 Formed joint venture Establishment of large with Merx (Apollo joint venture Portfolio Global) with Cargill Value ORIX sell out of legacy Investor Established Hong A320 and B737 Classic Kong office fleet, while adding newer aircraft through the cycle 2015 ORIX
Slide 11: Strategy, A Unique Business Model
ORIX Aviation: Strategy, A Unique Business Model Three Pillars of ORIX Aviation’s Business JV and Managed Owned Aircraft JOL Aircraft Aircraft Fleet Owned JOL JV & Managed ORIX Total Fleet Aircraft 57 ($2.7bn) 108 ($4.2bn) 48 ($1.2bn) 213 ($8.1bn) Average Aircraft Age (years) 3.9 5.7 9.9 5.7 Average
Slide 12: Portfolio breakdown
ORIX Aviation: Portfolio breakdown 40 35 24% Number of Aircraft 30 27% 25 Redelivery APAC Timeline 20 Global Americas 15 Breakdown 10 EMEA 5 0 49% Year 28% Aircraft Narrowbody 46% Airbus OEM Type Widebody 54% Boeing Breakdown 72% Type, OEM, and Region breakdown weighted based on Ascend valuations, D
Slide 13: S&P Ranked Aircraft Lease Servicer
ORIX Aviation: S&P Ranked Aircraft Lease Servicer Current Ranking ▪ ORIX Aviation is a unique Standard & Poor’s ranked Aircraft Lease Servicer. ▪ Highest available S&P ranking achieved across the broad scope of ORIX Aviation service offerings Strong Stable ▪ Demonstrates the significant capabilities
Slide 14: Regional Distribution and Diversification of Lessees
ORIX Aviation: Regional Distribution and Diversification of Lessees ORIX Aviation’s global reach spans 6 continents, 34 countries and 70 Airlines Copyright © 2019 ORIX Corporation All rights reserved. 14
Slide 15: Lessor Ranking by Number of Aircraft
ORIX Aviation: Lessor Ranking by Number of Aircraft 1993 1998 2003 2008 2013 2018 # Lessor Aircraft # Lessor Aircraft # Lessor Aircraft # Lessor Aircraft # Lessor Aircraft # Lessor Aircraft 1 AerFi Group Ltd 313 1 GECAS 769 1 GECAS 1314 1 GECAS 1722 1 GECAS 1575 1 GECAS 1112 2 Polaris 217 2 ILFC 377
Slide 16: Risk Management Central to our business
ORIX Aviation: Risk Management Central to our business Disciplined Aircraft Ongoing Airline Asset Analysis credit Review Macro Economic Portfolio and Jurisdictional Concentration Review Analysis Market Leading Profitability and ROE Copyright © 2019 ORIX Corporation All rights reserved. 16
Slide 17: Risk Management, Transactional
ORIX Aviation: Risk Management, Transactional A detailed credit assessment is carried out ahead of a new transaction focusing on the following key areas: Market health, Ownership Experience and Fleet, orderbook future growth Structure & KYC tenure of and route network prospects and Analysis Manageme
Slide 18: Active Market Participant, FY to date
ORIX Aviation: Active Market Participant, FY 19 to date Aircraft Acquisitions Aircraft Sales ▪ 29 units acquired to date worth $1.7bn ▪ 49 units sold to date worth $2.2bn ▪ 4 units committed for acquisition with ▪ 5 units committed for sale within FY19 FY19 worth $0.4bn worth $0.3bn ORIX Aviation en
Slide 19: Diverse Growth Strategy
ORIX Aviation: Diverse Growth Strategy ORIX Aviation acquired a 30% stake in Avolon on the 5th November 2018 A Unique investment opportunity which represents ORIX Corporation’s commitments to the leasing market • Instantaneous uplift in profit • Complimentary businesses with minimal areas of overlap
Slide 20: Leading Market Position
ORIX Aviation: Leading Market Position Delivered in Consistently excess of $26bn $8.5bn AUM Market Leading Ranked in Top 15 in transactions (owned, managed & Profitability and Lessors since committed) since 1991 ROE inception ORIX Aviation 100+ aircraft Active Market No Forward S&P Servicer sold JOL
Slide 21: Continued Growth
ORIX Aviation: Continued Growth Continued Fleet & Profit Growth Grow AUM portfolio Staff Aircraft Grow Aviation 120 350 team of 100 100 300 professionals 250 80 200 60 150 40 Maintain 100 Strong Ranking 20 50 0 0 FY2012 FY2013 FY2014 FY2015 FY 2016 FY2017 FY2018 FY2019 FY2020 FY2021 Staff Financial
Slide 22: Segment Profits & Segment Assets
Segment Profits & Segment Assets Segment Profits Segment Assets (JPY bn) (JPY bn) ORIX Aircraft-Related Operation Avolon ORIX Aircraft-Related Operation Avolon 40 600 500 30 400 20 300 200 10 100 0 0 FY2015 FY2016 FY2017 FY2018 FY2019 FY2015 FY2016 FY2017 FY2018 FY2019 Plan Plan Copyright © 2019 ORI
Slide 23: 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 24: ORIX Corporation
For the current IR materials and archives of past financial data please access our website ORIX Website https://www.orix.co.jp/grp/en/ IR Section https://www.orix.co.jp/grp/en/ir/ ORIX Corporation Corporate Planning Department World Trade Center Building., 2-4-1, Hamamatsu-cho, Minato-ku, Tokyo 105-