Orix Corporation · TSE:8591

Orix — FY2010 Earnings Presentation

26 slides from Orix's earnings presentation, May 11, 2010

  1. Slide 1: ORIX Corporation Conference Call

    ORIX Corporation (TSE: 8591; NYSE: IX) Conference Call Consolidated Financial Results For the Consolidated Fiscal Year Ended March 31, 2010 May 11, 2010 Haruyuki Urata Deputy President & CFO Yuichi Nishigori Deputy Head, Corporate Planning and Financial Control Headquarters Takao Kato Deputy Head, C

  2. Slide 2: Contents; Management Policies for the Year Ended 10.3

    Contents 1. Overview 3 - 13 2. Segment Performance 14 3. Segment Strategies 16 - 26 4. Appendix 28 – 42 5. Macro Economy 43 - 50 Copyright © 2010ORIX 2009ORIX Corporation All rights reserved. 2 1. Overview Management Policies for the Year Ended 10.3 Operating Environment Outlook „ Instability in Fin

  3. Slide 3: Main Points; Income Statement

    1. Overview Main Points „ Achieved all targets originally forecasted in the beginning of FY10.3 *1Net Income Attributable to ORIX *2 Excluding deposits of ORIX Trust and Banking *3 Total Segment Assets Copyright © 2010ORIX 2009ORIX Corporation All rights reserved. 4 1. Overview Income Statement „ St

  4. Slide 4: Further Growth Overcoming the Financial Crisis; Business Diversification

    1. Overview Further Growth having Overcame the Unprecedented Financial Crisis „ Achieved 37.8bn yen in Net Income*, with original forecast of 30.0bn „ “Business Diversification” and “Funding Diversification” have been proved effective during the crisis „ Turn the helm once again toward growth using

  5. Slide 5: Financial Stability (Funding Diversification); Enhanced Risk Management

    1. Overview Financial Stability (Funding Diversification) „ Maintained historical 50:50 ratio of direct and indirect funding „ Maintained stable relationships with a diversified base of more than 200 domestic and international financial institutions „ Maintained long-term debt balance resulting from

  6. Slide 6: Management Policy for FY11.3; Toward the Next Growth Stage

    1. Overview Management Policy for FY11.3 Management Policy 1．50% Net Income increase, profitability in all segments 2．Strengthen financial stability 3．Reinforce risk management 4. Pursue further sophistication of expertise Net Income forecast for 11.3: 57bn, mid-term target: ROE 10% Copyright © 2010

  7. Slide 7: Expanding Fee-businesses in the U.S.; Strategic Alliance in China

    1. Overview Ex. 1: Expanding Fee-businesses in the U.S. „Capitalize on existing profound expertise to enhance “Finance + Services” for growth ORIX USA Commercial Real Estate Finance Fee-business, Balance Sheet Control Next Strategy Loan Arrangement, Servicing Purchase of RED Capital RED Capital arra

  8. Slide 8: Segment Performance

    2. Overview of Performance Segment Performance „ Significant profit contributions from the Overseas Business and Retail segments * Segment profit includes “income before income taxes and discontinued operations” as well as results of “discontinued operations” and net income attributable to the nonco

  9. Slide 9: Corporate Financial Services: Performance and Forecast

    3-1. Corporate Financial Services / Performance Three Year Trend in Segment Profits (JPY Bn) 08.3 09.3 10.3 Segment Revenues 139.9 137.7 113.7 Segment Profit 35.4 (10.5) (17.6) Segment Assets 1,993.4 1,583.6 1,236.9 ROA 1.8% -0.6% -1.2% March 31, 2010 Results ¾Reduced assets, mainly real estate-rela

  10. Slide 10: Maintenance Leasing: Performance and Forecast

    3-2. Maintenance Leasing / Performance Three Year Trend in Segment Profits (JPY Bn) 08.3 09.3 10.3 Segment Revenues 236.4 236.0 223.0 Segment Profit 37.2 25.6 21.7 Segment Assets 649.8 648.3 561.5 ROA 5.8% 3.9% 3.6% March 31, 2010 Results ¾Performed solidly in a severe environment due to ORIX Auto a

  11. Slide 11: Real Estate: Performance and Forecast

    3-3. Real Estate / Performance Three Year Trend in Segment Profits (JPY Bn) 08.3 09.3 10.3 Segment Revenues 288.8 270.0 189.5 Segment Profit 83.1 50.5 9.4 Segment Assets 1,077.6 1,175.4 1,079.3 ROA 8.4% 4.5% 0.8% March 31, 2010 Results ¾Maintained property yields through rental property leasing expe

  12. Slide 12: Investment Banking: Performance and Forecast

    3-4. Investment Banking / Performance Three Year Trend in Segment Profits (JPY Bn) 08.3 09.3 10.3 Segment Revenues 127.2 94.6 89.6 Segment Profit 47.5 (63.4) (12.0) Segment Assets 1,698.5 1,321.5 1,166.7 ROA 3.1% -4.2% -1.0% March 31, 2010 Results ¾Decreased the non-recourse loan balance by cooperat

  13. Slide 13: Retail: Performance and Forecast

    3-5. Retail / Performance Three Year Trend in Segment Profits (JPY Bn) 08.3 09.3 10.3 Segment Revenues 198.9 183.3 155.9 Segment Profit 27.5 9.6 31.1 Segment Assets 1,450.2 1,554.0 1,578.8 ROA 1.9% 0.6% 2.0% March 31, 2010 Results ¾Life Insurance premiums and related investment income significantly

  14. Slide 14: Overseas Business: Performance and Forecast

    3-6. Overseas Business / Performance Three Year Trend in Segment Profits (JPY Bn) 08.3 09.3 10.3 Segment Revenue 218.2 167.6 185.9 Segment Profits 57.9 20.1 37.1 Segment Assets 1,037.3 949.9 860.8 ROA 5.3% 2.0% 4.1% March 31, 2010 Results ¾U.S. operations have accumulated expertise and increased pro

  15. Slide 15: Appendix: Fortified Financial Positioning - Funding

    APPENDIX Copyright © 2010ORIX 2009ORIX Corporation All rights reserved. 28 4. Appendix: (1) Fortified Financial Positioning - Funding „ Steadily reduced interest-bearing debt through sufficient cash flow and capital increase „ Maintain sufficient liquidity on hand by increasing cash on hand and avai

  16. Slide 16: Fortified Financial Positioning: Trend in Funding Costs

    4. Appendix: (1) Fortified Financial Positioning – Trend in Funding Costs „ Funding costs are following a stable trend 8.00% Japan 7.00% Overseas 6.00% 4.49% 4.62% 5.00% 4.34% 3.82% 4.00% 3.28% 3.21% 3.15% 2.94% 3.00% 2.00% 1.37% 1.45% 1.44% 1.42% 1.36% 1.33% 1.37% 1.34% 1.00% 0.00% 08.6 08.9 08.12

  17. Slide 17: Bolster Real Estate Risk Management: Main Points

    4. Appendix:(2) Bolster Real Estate Risk Management: Main Points „ Cautiously seek exits, aim to replace with quality assets (JPY Bn) Copyright © 2010ORIX 2009ORIX Corporation All rights reserved. 32 4. Appendix: (2) Bolster Real Estate Risk Management Non-Recourse Loans and Specified Bonds in the I

  18. Slide 18: Real Estate Risk Management: Non-Recourse Loans

    4. Appendix: (2) Bolster Real Estate Risk Management Non-Recourse Loans and Specified Bonds in the Investment Banking Segment „9% development projects. Of these, 80% are under construction „All development projects in Tokyo are within the 5 main Tokyo wards* (JPY Bn) Balance Mezzanine Senior (ORIX G

  19. Slide 19: Real Estate Risk Management: Rental Properties and Condos

    4. Appendix: (2) Bolster Real Estate Risk Management Rental Properties in the Real Estate Segment „ Stable cash flows, sufficient profitability „ Over 80% in three main metropolitan areas (JPY Bn) Market Environment „ Increase in office building vacancy rates, rents continue to decline Current condi

  20. Slide 20: Enhanced Monitoring of Investments; Market-related Assets

    4. Appendix: (3) Enhanced Monitoring of Investments Business Conditions of Companies Invested In „ Significant improvement seen in both companies’ financial stability and performance in 10.3, low risk of additional impairment „ Third-party allotment to AIU Group by Fuji Fire & Marine. ORIX holding b

  21. Slide 21: Market-related Assets Overseas / U.S.; Credit Cost

    4. Appendix: (3) Condition of Market-related Assets –Overseas / U.S.- „ U.S. operations continuing to generate profits despite stagnant real economy in the U.S. „ Enhanced monitoring of the CMBS portfolio (JPY Bn) *1 Unrealized gains (losses) are valuation gains (losses) on available for sale securi

  22. Slide 22: Corporate Financial Services Credit Cost; Macro Economy

    4. Appendix: (4) Corporate Financial Services Credit Cost „ Provisions Charged to Income remain high „ Loans Individually Evaluated for Impairment significantly decreased since the fourth quarter of the previous fiscal year (JPY Bn) Copyright © 2010ORIX 2009ORIX Corporation All rights reserved. 42 M

  23. Slide 23: Stock Market; Macro Economic Indicators

    Stock Market The Japanese stock market may be oversold Performance of Major Stock Markets since January 2007 300 250 CSI 300 (China) SENSEX (India) 200 KOSPI (Korea) 150 Hang Seng (HK) DAX (Germany) 100 FTSE100 (UK) Dow Jones (US) 50 Nikkei (Japan) 0 2010/3/31 2007/1/5 2007/3/5 2007/5/5 2007/7/5 200

  24. Slide 24: Industrial Indices; Bank Lending in Japan

    Industrial Indices Industrial Production and Net Exports returning after a period of inventory adjustment Industrial Production (Billions of yen) Exports / Imports (Month on Month Change) 8% 8,000 6% 7,000 4% 6,000 2% 5,000 0% 4,000 -2% 3,000 -4% 2,000 -6% 1,000 -8% 0 -10% -1,000 07.3 07.6 07.9 07.1

  25. Slide 25: REIT Performance and Condo Sales in Japan; Land Price Index

    REIT Performance and Condo Sales in Japan The real estate market remains sluggish (Yen) Japan TSE REIT Index (Units) Trend in Tokyo Condo Sales 3,000 9,000 8,000 2,500 7,000 2,000 6,000 5,000 1,500 4,000 1,000 3,000 2,000 500 1,000 0 0 07.3 07.6 07.9 07.12 08.3 08.6 08.9 08.12 09.3 09.6 09.9 09.12 1

  26. Slide 26: Urban Land Price Comparison; Additional Information

    Urban Land Price Comparison Urban land prices in Japan less affected than other major cities Japanese land prices not expected to further decrease significantly 350 (%, 2000-100) 300 250 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Tokyo Osaka London Frankfurt New York San Fran

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