Orix Corporation · TSE:8591
Orix — Q3 2020 Earnings Presentation
37 slides from Orix's earnings presentation, Feb 3, 2020
Slide 1: Third Quarter Consolidated Financial Results
ORIX Corporation Third Quarter Consolidated Financial Results For the Nine-Month Period Ended December 31, 2019 Hitomaro Yano Executive Officer Head of Treasury and Accounting Headquarters February 3, 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 ✓ 244.3 JPY bn in net income, up by 3.4% YoY. Annualized ROE at 11.0% Net Income* and ROE Reference: Past Quarterly ROE (JPY Bn) 15.2% 15.0% 000 100 13.2% 12.5% 14.3% 13.7% 11.9% 11.5% 12.3% 9.6% 9.6% 11.4% 00 900 11.5% 11.7% 11.3% 12.1% 11.5% 8.5% 35 0. 0 11.6% 11.0% 13
Slide 3: Overview (2) Breakdown of Segment Profits
Overview（2） Breakdown of Segment Profits FY20.3 Q3 Of which 238.5 JPY bn up by 7% YoY (+16.0 JPY bn) Segment Profits Other than Exceeded the level of last year with the contribution of new M&A (NXT, Avolon), gains on sales although there are a few segments where the profits decreased YoY 352.9 JPY b
Slide 4: Overview (3) Segment Profits / Segment Assets
Overview（3） Segment Profits / Segment Assets ✓ Segment Profits: 352.9 JPY bn Real Estate, Investment and Operation, Retail and Overseas Business increased YoY while Corporate Financial Services and Maintenance Leasing decreased YoY ✓ Segment Assets: 10.9 JPY tn up by 9% YTD (+861.5 JPY bn) *Includes
Slide 5: 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: 13.2 JPY bn YoY ▲6.6 JPY bn (▲33％) Segment Assets: 1,000.1 JPY bn YTD +40.4 JPY bn (
Slide 6: Segment Performance (1) Corporate Financial Services
Segment Performance（1） Corporate Financial Services （JPY Bn） Change FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YoY) Finance revenues 37.4 36.0 32.4 30.7 28.8 22.3 18.2 82% Gains on investment securities and dividends 1.0 7.1 2.5 17.1 -0.8 -0.7 1.5 - Operating leases 24.5 25.5 25.6 23.4 23.5
Slide 7: Segment Performance (2) Maintenance Leasing
Segment Performance（2）Maintenance Leasing Segment Profits: 25.8 JPY bn YoY ▲4.6 JPY bn (▲15％) Segment Assets: 900.9 JPY bn YTD +27.2 JPY bn (+3％) ✓ Revenues from both Auto and Rentec increased. ✓ IT-related rental assets increased ✓ SG&A increased from service improvement partly causing profit to de
Slide 8: Segment Performance (2) Maintenance Leasing
Segment Performance（2） Maintenance Leasing （JPY Bn） Change FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YoY) Finance revenues 11.7 12.5 13.4 14.2 14.4 10.7 11.8 110% Operating leases 185.7 188.9 187.3 189.7 198.0 147.7 154.4 105% Services income 62.5 66.8 66.3 67.8 70.6 52.4 53.1 101% Segment
Slide 9: Segment Performance (3) Real Estate
Segment Performance（3） Real Estate Segment Profits: 56.1 JPY bn YoY +1.3 JPY bn (+3％) Segment Assets: 756.1 JPY bn YTD +35.9 JPY bn (+5％) ✓ Gains on sales from ORIX Living in Q2 ✓ Assets decreased due to some selling while new investments continue ✓ The number of condominiums delivered in Q3 increas
Slide 10: Segment Performance (3) Real Estate
Segment Performance（3） Real Estate （JPY Bn） Change FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YoY) Finance revenues 4.2 6.9 2.4 2.1 2.1 1.5 2.1 140% Operating leases 71.4 67.9 96.0 55.2 72.5 56.0 49.0 88% Gains on Rental Property Sales 15.5 16.8 50.6 14.3 35.0 27.1 23.0 85% Sales of goods a
Slide 11: Segment Performance (4) Investment and Operation
Segment Performance（4） Investment and Operation Segment Profits: 55.6 JPY bn YoY +24.5 JPY bn (+79％) Segment Assets: 808.5 JPY bn YTD +74.9 JPY bn (+10％) ✓ Gains on sales in private equity investment posted in Q1 and Q3. ✓ Made wind power generation investees in overseas into our wholly owned Conces
Slide 12: Segment Performance (4) Investment and Operation
Segment Performance（4） Investment and Operation （JPY Bn） Change FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YoY) Finance revenues 16.0 12.9 11.0 9.3 9.1 7.0 5.2 74% Gains on investment securities and dividends 9.3 10.2 12.9 7.6 0.1 0.1 2.1 1423% Sales of goods and real estate 276.5 596.7 825
Slide 13: Segment Performance (5) Retail
Segment Performance（5）Retail Segment Profits: 70.4 JPY bn YoY +4.2 JPY bn (+6％) Segment Assets: 4,110.3 JPY bn YTD +538.9 JPY bn (+15％) ✓ Life insurance remained solid. Loss from variable life insurance posted in the ✓ Investment in securities at life insurance business and installment loans at prev
Slide 14: Segment Performance (5) Retail
Segment Performance（5） Retail （JPY Bn） Change FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YoY) Finance revenues 56.8 61.0 68.1 72.9 76.7 57.6 60.2 104% Life insurance premiums and related investment income 352.5 190.8 297.9 353.0 348.3 229.1 291.7 127% Segment Revenues 426.1 254.4 368.7 428.
Slide 15: Segment Performance (6) Overseas Business
Segment Performance（6） Overseas Business Segment Profits: 131.9 JPY bn YoY +36.3 JPY bn (+38%) Segment Assets: 3,283.2 JPY bn YTD +144. 2 JPY bn (+5％) ✓ Profit from new investments in FY19.3 and gains on sales in Asia and U.S. ✓ Installment loans at OCU business and aircraft operating lease assets i
Slide 16: Segment Performance (6) Overseas Business
Segment Performance（6） Overseas Business （JPY Bn） Change FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YoY) Finance revenues 67.3 79.4 85.1 98.4 111.6 80.5 93.6 116% Gains on investment securities and dividends 29.8 16.1 13.3 17.5 16.6 5.5 23.5 425% Operating leases 82.1 92.0 88.4 111.6 121.9
Slide 17: Financial Soundness: Funding structure / Employed Capital Ratio
Financial Soundness Funding structure / Employed Capital Ratio ✓ Funding Structure : Diversified funding methods and maintained a high ratio of long-term debt ✓ Employed Capital Ratio : Continue to pursue growth while controlling risk and return Breakdown of Funding and Shareholder’s Equity / Trend
Slide 18: Summary
Summary FY20.3 Q3 net income was 244.3 JPY bn (up by 3.4% YoY) Annualized ROE at 11.0% Achieving 300 JPY bn net income in FY20.3 is on track Aiming for sustainable growth while consideration to shareholders return continued Copyright © 2020 ORIX Corporation All rights reserved. 18
Slide 19: Appendix
Appendix Copyright © 2020 ORIX Corporation All rights reserved. 19
Slide 20: Medium to Long-Term Strategic Directions
Medium to Long-Term Strategic Directions FY19.3 to FY21.3 （Revised strategic directions below was announced at Q2 financial results briefing on October 29, 2019) Profit FY20.3 Growth Net income (Forecast) : 300 JPY bn (▲7% YoY, pre-tax profit +9%) Capital FY21.3 Efficiency Net income (Forecast) : To
Slide 21: About ORIX: Proven Track Record of Profitability
About ORIX Proven Track Record of Profitability ✓ ORIX has achieved 54 years of sustained, profitable growth (JPY Bn) Net Income Attributable to ORIX Corporation Shareholders 350 300 250 FY2002.3 FY2009.3 Burst of IT bubble Global financial crisis 200 FY1998.3 Asian currency crisis 150 FY1993.3 Burs
Slide 22: 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. 22
Slide 23: 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% 7% Corporate Financial Finance and fee business Services 37% 16% Segment Profits Automobile leasing and rentals, car-sharing; 352.9 JPY Bn Maintenan
Slide 24: 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. 24
Slide 25: Appendix (1) Performance Overview
Appendix（1） Performance Overview （JPY Bn） Change FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YoY) Total Revenues 2,174.3 2,369.2 2,678.7 2,862.8 2,434.9 1,796.2 1,684.4 94% Net Income *1 234.9 260.2 273.2 313.1 323.7 236.2 244.3 103% Segment Assets 9,464.8 9,246.3 9,201.9 9,098.9 9,997.7 9,9
Slide 26: Appendix (2) Profits by Segment
Appendix（2） Profits by Segment （JPY Bn） Change FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YoY) Corporate Financial Services 25.5 42.4 38.0 49.3 25.5 19.8 13.2 67% Maintenance Leasing 40.4 42.9 39.8 40.2 38.8 30.4 25.8 85% Real Estate 9.8 52.3 84.5 74.4 89.2 54.7 56.1 102% Investment and Ope
Slide 27: Appendix (3) Assets by Segment
Appendix（3） Assets by Segment （JPY Bn） Change FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YTD) Corporate Financial Services 1,203.4 1,133.9 1,086.0 991.8 959.7 974.9 1,000.1 104% Maintenance Leasing 750.7 783.0 806.7 847.2 873.8 862.4 900.9 103% Real Estate 1,054.9 917.7 843.9 802.0 720.2 79
Slide 28: Appendix (4) Income Statement Data
Appendix（4） Income Statement Data （JPY Bn） Change FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YoY) Finance revenues 192.8 208.2 211.9 228.3 242.9 180.0 190.5 106% Gains on investment securities and dividends 56.4 35.8 30.3 43.3 16.0 4.8 27.7 580% Operating leases 124.9 128.8 155.1 127.3 156.
Slide 29: Appendix (5) Funding
Appendix（5） Funding （JPY Bn） Change Funding FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 19.3 Q3 20.3 Q3 (YoY) CP 89.6 102.4 50.1 54.9 41.1 188.6 84.3 -104.3 Borrowings from Financial Institutions 2,881.6 2,970.6 2,958.2 3,056.2 3,279.4 3,287.0 3,355.9 68.9 Bonds / MTN 1,151.5 938.1 885.1 940.1 997.5 954.8 93
Slide 30: 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 Dec 31, 2019 3.00% 60% 2.00% 40% 1.00% 20% CP 1% 0.00% 0% 15.3 16
Slide 31: 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 2.7× Total ORIX Corporation 6 Shareholders’ Equity 2.5× 2.3× 5 2.2× 2.2× 2.2× 2.1× Deposits 1.9× 4 1.7× 1.6× 1.5× 1.5× Short- and Long-Term Debt 3 （Excluding Deposits)
Slide 32: Financials (3) Bond Maturity Ladder
Financials（3）Bond Maturity Ladder ✓ Leveled out annual redemption amounts by dispersing bond maturities Maturity Ladder (As of Dec 31, 2019) Copyright © 2020 ORIX Corporation All rights reserved. 32
Slide 33: Performance in Three Categories
Performance in Three Categories See P.34 for details on the three categories Growth in Finance will not be proactively sought under the current low interest rate environment; rather, efforts will be made to maintain the current status. Focus will continue to be put on Operation and Investment with h
Slide 34: 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 35: Shareholders Return
Shareholders Return ✓ The interim dividend at 35 yen per share in FY20.3 ✓ The full year dividend in FY20.3 will be either a payout ratio of 30% or 76 yen per share, whichever is higher ✓ Maintain optimal balance between investment opportunities for sustainable future profit growth and stable shareh
Slide 36: 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 37: 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,