Orix Corporation · TSE:8591
Orix — FY2014 Earnings Presentation
46 slides from Orix's earnings presentation, May 9, 2014
Slide 1: Consolidated Financial Results for Fiscal Year Ended March 31, 2014
ORIX Corporation C ti (TSE: 8591; NYSE: IX) Consolidated Financial Results For the Consolidated Fiscal Year Ended March 31,, 2014 May 9, 2014 Yoshihiko Miyauchi Chairman & CEO Makoto Inoue President & Co-CEO Co CEO Haruyuki Urata Deputy President & CFO Copyright © 2014 ORIX Corporation All rights re
Slide 2: 50th Anniversary: Changes in 50 years
50th Anniversary Changes in 50 years Record Net Income in sight 1964 1980 1988 2014 Incorporation Acquired 50th Anniversary Pro Baseball Team No. of Employees 13 930 4,010 25,977 Shareholders’ Equity ¥.1bn ¥43.8bn ¥136.2bn ¥1,918.7bn 1 16 19 36 Locations countries and countries and countries and c
Slide 3: 50th Anniversary: Values that will not change
50th Anniversary Values that will not change ORIX DNA and ORIX identity will continue to be the back bone for the next stage of growth Self-Reliant Managing Cyclical Changes Venturingg into Bold yet Prudent Creating C ti Neighboring Areas New Values Diligent Keep Mixed Seamless Coordination Copyri
Slide 4: Next 50 years: An even stronger ORIX
Next 50 years An even stronger ORIX On the 50th year mark, ORIX is in its best shape ever (1) Financial condition (2) Human capital (3) Network JPY Tn Interest Bearing Liabilities（excl. ABS/CMBS,Deposit） times 6 Shareholders' Equity 25 D/E Ratio （right）* 5 20 4 15 3 10 2 1 5 0 0 80.9 85.9 90.3 95.
Slide 5: Next 50 years: Looking ahead of time
Next 50 years Looking ahead of time Repeat creative destruction • Dynamic and swift decision making that is responsive to market changes • Look ahead of time and create brand new market • Fortify the unique “ORIX” business model that is unparalleled in the world Strive to be a better company • O
Slide 6: Overview
Overview FY14.3 Achieved 186.8bn yen in Net Income*, up 67% YoY Achieved 10% ROE Increased dividend** from 13 yen to 23 yen FY15 3 FY15.3 Target 210.0bn 210 0bn yen in Net Income Income*, up 12% YoY JPY Bn 10.5% 250 210.0 200 7.4% 186.8 6.2% 150 111.9 100 83.5 50 * Net Income refers to Net Income At
Slide 7: Basic Strategies hereafter: Growth and Shareholder Return
Basic Strategies hereafter Growth and Shareholder Return No changes to the basic strategies of acceleration of “Finance + Services” and “Debt to Equity, and onto Operation” • Expand businesses that is conducive to base profit growth • Capitalize on expertise while not over-relying over relying on
Slide 8: Segment Results and Strategies: Segment Profits
Segment Results and Strategies Segment Profits FY14.3: Investment and Operation, Overseas Business, and Real Estate segments recorded significant profit growth exceeding 10bn yen FY15.3: Expect continued strong profit growth mainly from Overseas Business and Retail segments JPY Bn 350 Large Valu
Slide 9: Segment Results and Strategies: Segment Assets
Segment Results and Strategies Segment Assets FY14.3: Significant increase in assets, driven by Overseas Business segment FY15.3: Investment and Operation and Overseas Business segments will take the lead in investment for the future growth JPY Tn Consolidation of Hartford Life Insurance 10 2.7%
Slide 10: Corporate Financial Services / Maintenance Leasing
Corporate Financial Services/ Segment Results and Strategies Maintenance Leasing Corporate Financial Services: Strong group RM capability, expand assets and fee revenues Segment Profits Base Profits Segment g Assets ROA ((After Tax)) JPY Bn 30 JPY Bn 1.7% 1.6% 1,000 1.4% 25 800 20 15 600 10 400 5
Slide 11: Real Estate / Investment & Operation
Segment Results and Strategies Real Estate/ Investment & Operation Real Estate: Create new business model, restructure portfolio, and strengthen facilities operation and fee business JPY Bn Segment Profits Base Profits Segment Assets ROA (After Tax) 30 JPY Bn 1,500 1.1% 20 1,000 10 500 0.3% 0.1% 0
Slide 12: Retail / Overseas Business
Segment Results and Strategies Retail/Overseas Business Retail: Stable profitability base, exponential growth in card loan and life insurance Segment Profits Base Profits Segment Assets ROA (After Tax) JPY Bn JPY Bn 1 5% 1.5% 60 1.4% 50 2,000 40 1,500 30 1,000 0.7% 20 10 500 0 0 12 3 12.3 13 3 13.
Slide 13: Summary
Summary FY14.3: Achieved 186.8bn yen in Net Income, 67% increase YoY Achieved 10% ROE, aim to steadily achieve 10% ROE going forward Aim for double digit g ggrowth byy repeating p g creative destruction Copyright © 2014 ORIX Corporation All rights reserved. 12
Slide 14: This page is intentionally left blank
This page is intentionally left blank Copyright © 2014 ORIX Corporation All rights reserved. 13
Slide 15: Appendix
Appendix pp Copyright © 2014 ORIX Corporation All rights reserved. 14
Slide 16: About ORIX: Sustainable Growth
About ORIX Sustainable Growth Aim to break past record of net income in FY15.3 Net Income Attributable to ORIX Corporation JPY Bn FY2015.3 250 210.0 Bn FY2009.3 Target Collapse of Lehman Brothers FY2014.3 FY2014 3 186.8 Bn 200 FY2002.3 Bursting of the IT 150 Bubble FY1998.3 Asian Currency Crisis 1
Slide 17: About ORIX: Business expertise and Group-wide capability
About ORIX Business expertise and Group-wide capability ORIX evolved by venturing 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 rehabilitatio
Slide 18: 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, but rather it is a way of eliminating barriers that exist in Japan 36 Countries and Regions Worldwide (As
Slide 19: Changing Balance Sheet Structure
Changing Balance Sheet Structure Improving profitability while strengthening financial soundness Percentage of JPY Tn Real Estate Segment Others excl. Real Estate Real Estate （ROA） 10 Percentage of Real Estate Segment Asset ROA 3.00% 30% 3% 8 2.00% 20% 2% 6 4 1.00% 10% 1% 2 0 0.00% 0% 0% 07.3 08.3
Slide 20: Changing Revenue Structure
Changing Revenue Structure Solid growth in base profit and pursuit of stabilized capital gains Base Profits and Capital Gains JPY Bn Base Profits Capital Gains Large Valuation Gains 300 250 200 150 100 50 0 07.3 08.3 09.3 10.3 11.3 12.3 13.3 14.3 15.3 Target Copyright © 2014 ORIX Corporation All r
Slide 21: Appendix(1) Trend in Performance
Appendix(1) Trend in Performance (JPY Bn) 12.3 13.3 14.3 Total Revenues 964.8 1,055.8 1,341.7 Net Income *1 83.5 111.9 186.8 S Segment tAAssets t 6 123 9 6,123.9 6 382 7 6,382.7 7 281 4 7,281.4 Total Assets 8,332.8 8,439.7 9,069.4 Shareholders' Equity Shareholders 1 380 7 1,380.7 1 643 6 1,643.6 1 9
Slide 22: Appendix(2) Profit by Segment
Appendix(2) Profit by Segment (JPY Bn) 12.3 13.3 14.3 Change Corporate Financial Services 23.0 25.9 24.9 96% Maintenance Leasing 33.3 34.9 37.1 106% Real Estate 1.3 5.6 18.0 322% Investment and Operation 16.0 34.9 94.1 269% Retail 19.4 43.2 49.9 115% Overseas Business 49.8 52.8 69.7 132% Total Segme
Slide 23: Appendix(3) Assets by Segment & Region
Appendix(3) Assets by Segment & Region (JPY Bn) By Segment 12.3 13.3 14.3 Change Corporate Financial Services 946.5 943.3 992.1 105% Maintenance Leasing 490.9 549.3 622.0 113% Real Estate 1,390.5 1,133.2 962.4 85% Investment and Operation 471.9 444.3 565.7 127% Retail 1,742.9 1,994.1 2,167.0 109% Ov
Slide 24: Appendix(4) Segment Performance: Corporate Financial Services
Appendix(4) Segment Performance : Corporate Financial Services (JPY Bn) 13.3 14.3 Change FY15.3 Plan Base Profits 26.1 22.1 85% Numerical Aspects Capital p Gains 0.3 1.9 - Steady growth in asset balance Provisions -0.3 1.0 - Increase base profits with a focus Impairments -0.1 -0.2 - on fee reven
Slide 25: Appendix(5) Segment Performance: Maintenance Leasing
Appendix(5) Segment Performance : Maintenance Leasing (JPY Bn) 13.3 14.3 Change FY15.3 Plan Base Profits 34.9 38.7 111% Numerical Aspects Capital Gains 0.0 0.1 - Maintain high profitability Provisions 0.1 -0.4 - Impairments -0.1 -1.3 - Increase base profits via asset growth Segment Profits 34.9
Slide 26: Appendix(6) Segment Performance: Real Estate
Appendix(6) Segment Performance : Real Estate (JPY Bn) 13.3 14.3 Change FY15.3 Plan Base Profits 25.0 22.9 92% Numerical Aspects Capital Gains 16.5 22.5 - Assets are reduced while continuing Provisions 0.4 -2.1 - to turnover assets Impairments -36.4 -25.4 - Decrease in base profits due to Segmen
Slide 27: Appendix(7) Segment Performance: Investment & Operation
Appendix(7) Segment Performance : Investment & Operation (JPY Bn) 13.3 14.3 Change FY15.3 Plan Base Profits 29.1 29.9 103% Numerical Aspects Capital Gains 19.0 68.6 - NPL investment will decline while Provisions -5.5 -2.6 - environment and energy business and PE Impairments -7.6 -1.8 - investment
Slide 28: Appendix(8) Segment Performance: Retail
Appendix(8) Segment Performance : Retail (JPY Bn) 13.3 14.3 Change FY15.3 Plan Base Profits 42.1 49.5 117% Capital Gains 3.7 3.9 - Numerical aspects Provisions -2.6 26 -3.5 35 - Base profit growth due to an increase in Impairments 0.0 0.0 - assets from existing business Segment Profits 43.2 49.9 1
Slide 29: Appendix(9) Segment Performance: Overseas Business
Appendix(9) Segment Performance : Overseas Business (JPY Bn) 13.3 14.3 Change FY15.3 Plan Base Profits 37.5 65.6 175% Numerical aspects Capital Gains 19.3 20.9 - Steady growth in asset balance Provisions -2.4 -5.7 - Impairments -1.6 -11.1 - Growth in base profits due to annual profit contributio
Slide 30: Appendix(10) Real Estate Portfolio
Appendix(10) Real Estate Portfolio 1 ■ Trend in Real Estate Segment Assets by Type (JPY Bn) 12.3 13.3 14.3 Rental Property 876.3 754.4 665.8 Under Lease 705.9 603.4 537.9 Under Development 170.4 151.0 128.9 Condo Assets 87.3 55.4 31.1 NRL / Specified Bonds 205.4 113.4 ＊ 48.8 Operating Facilities 153
Slide 31: Appendix(11) Real Estate Portfolio
Appendix(11) Real Estate Portfolio 2 ■ Rental Property Assets by Type (14.3) (JPY Bn) Under Lease Under Property Type Total Balance NOI Yield Development Office Buildings 174.0 4.0% 59.7 233.7 Logistics Centers 23.4 6.5% 1.3 24.7 Commercial Facilities 123.5 6.7% 25.2 148.7 Rental Condos 102.9 4.5% 7
Slide 32: Appendix(12) Robeco
Appendix(12) Robeco (JPY Bn) 14.3 2Q 14.3 3Q 14.3 4Q S Segment tPProfits fit 44 4.4 59 5.9 11 2 11.2 Segment Assets 328.9 365.0 375.1 ROA (After Tax) 3.3% 3.7% 5.0% (EUR Bn) 2013.1-3* 2013.4-6* 2013.7-9 2013.10-12 2014.1-3 End of Period AUM 198.3 192.5 197.1 205.2 210.7 Net New Money 0.6 0.2 0.1 0.6
Slide 33: Appendix(13) Funding and Liquidity
Appendix(13) Funding and Liquidity (JPY Bn) 12.3 13.3 14.3 CP 180 4 180.4 151 5 151.5 101 0 101.0 Borrowings from Financial Institutions 2,277.3 2,368.0 2,638.8 Bonds / MTN 1,393.0 1,283.0 1,174.8 Deposits 1,103.5 1,078.6 1,206.4 Subtotal 4,954.3 4,881.1 5,121.1 ABS, CMBS 874.7 679.8 253.8 Short-ter
Slide 34: Appendix(14) Asset Quality
Appendix(14) Asset Quality ■ Asset Quality (Adjusted **) (JPY Bn) 12.3 13.3 14.3 Investment in Direct Financing Leases 728.0 826.4 971.4 90+Days Past Past-Due Due Direct Financing Leases 17 4 17.4 15 8 15.8 13 9 13.9 Installment Loans 2,073.2 2,176.1 2,155.2 90+Days Past-Due Loans 8.6 7.7 6.1 Not in
Slide 35: Appendix(15) Reconciliation Table of Non-GAAP Financial Measurement
Appendix(15) 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 transact
Slide 36: Appendix(16) Reconciliation Table of Non-GAAP Financial Measurement
Appendix(16) Reconciliation Table of Non-GAAP Financial Measurement (JPY Bn) Key Ratio 12.3 13.3 14.3 Total Assets （a） 8,332.8 8,439.7 9,069.4 Deduct: Payables under Securitized Leases Leases, Loan Receivables and 874.7 679.8 253.8 Investment in Securities Adjusted Total Assets （b） 7,458.1 7,759.9 8
Slide 37: Appendix(17) Reconciliation Table of Non-GAAP Financial Measurement
Appendix(17) 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 L i Leasing B i Business T t l Total St t Statement t Services Operation Adjustment Base
Slide 38: Reference Data
Reference Data Copyright © 2014 ORIX Corporation All rights reserved. 37
Slide 39: Macro Economic Indicators
Macro Economic Indicators National CPI (Ex Fresh Food) Trends in Machineryy Orders (YoY Change) (Indicator of Capital Expenditure) (% Change) (JPY Tn) 10 0 10.0 35 3.5 18 1.8 1.6 8.0 3.0 1.4 6.0 2.5 1.2 4.0 2.0 1.0 2.0 1.5 0.8 0.6 0.0 1.0 Private demand excl. volatile orders*(Left） 04 0.4 -2.0 0.5 M
Slide 40: Japanese Corporate Indices
Japanese Corporate Indices Corporate Bankruptcies Tankan Corporate Diffusion Index (Q t l B (Quarterly Basis) i) (JPY Tn) (Cases ) 30 4.0 4,500 4,000 20 3.0 3 500 3,500 10 2.0 3,000 0 1.0 -10 2 500 2,500 0.0 2,000 -20 10.3 11.3 12.3 13.3 14.3 10.3 11.3 12.3 13.3 14.3 Liabilities (Left) Bankruptcies
Slide 41: Japanese Real Estate Indicators
Japanese Real Estate Indicators Japan TSE REIT Index Office Rental Rates (Yen per 3.3㎡) 2 000 2,000 16,000 14,000 1,500 12,000 10,000 1,000 8,000 6,000 500 4,000 2,000 0 0 10 3 10.3 11 3 11.3 12 3 12.3 13 3 13.3 14 3 14.3 09 12 09.12 10 12 10.12 11 12 11.12 12 12 12.12 13 12 13.12 Tokyo Avg.Rent Osa
Slide 42: Other Domestic Indicators
Other Domestic Indicators Trend in Domestic Supply of Domestic Shipping Amount of Solar Cell Renewable Energy （Primary Energy Supply Basis） (Petajoule) (MW) 1,600 , 7,000 , 1,550 Others 6,000 1,500 Residential 5,000 1,450 1,400 4,000 1,350 3,000 1,300 2 000 2,000 1,250 1,200 1,000 1,150 0 01 3 01.3
Slide 43: Other Domestic Indicators
Other Domestic Indicators The number of M&A The number of the New Listed Companies (Cases) (Cases) OUT-IN 180 3,000 IN-OUT 160 2,500 IN-IN IN IN 140 2,000 120 100 1,500 80 1,000 60 40 500 20 0 0 01.12 03.12 05.12 07.12 09.12 11.12 13.12 02.12 04.12 06.12 08.12 10.12 12.12 14.3 Source: RECOF Corporat
Slide 44: Other Domestic Indicators
Other Domestic Indicators Retail Life Insurance Consumer Finance Loans (JPY Bn) (JPY Bn) 25,000 14,000 12,000 20,000 10,000 15,000 8 000 8,000 10,000 6,000 4,000 5,000 2,000 0 0 01.3 03.3 05.3 07.3 09.3 11.3 13.3 01.3 03.3 05.3 07.3 09.3 11.3 13.3 Retail Life Insurance Premiums Consumer Finance Loan
Slide 45: 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 46: 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: bi URL: http://www.orix.co.jp/grp/en/ URL h // i j / / / IR Website: URL: http://www.orix.co.jp/grp/en/ir/ If you would ld lik like to b be iincl