Orix Corporation · TSE:8591
Orix — Q1 2023 Earnings Presentation
44 slides from Orix's earnings presentation, Aug 3, 2022
Slide 1: First Quarter Consolidated Financial Results
ORIX Corporation First Quarter Consolidated Financial Results For the Three Month Period Ended June 30, 2022 Hitomaro Yano Executive Officer Head of Treasury and Accounting Headquarters August 3, 2022 1 Company Name (TSE: 8591; NYSE: IX) Copyright © 2022 ORIX Corporation All rights reserved.
Slide 2: Executive Summary
Executive Summary (1) Net Income 61.9 Bn JPY (YoY -5%), annualized ROE 7.5% Higher profits in 5 of 10 segments Demand recovered in Aircraft and Ships, economic activity resumed in Asia and Australia (2) Performance of segments diverged, depending on economic environment In US, PE investment gains de
Slide 3: Net Income & ROE
Net Income & ROE ✓ 61.9 Bn JPY in net income*, annualized ROE of 7.5% ✓ 3.4 Bn JPY lower YoY (-5%), 1.1% point drop in ROE Full-Fiscal Year Quarterly 400 13.0% 120 10.6% 12.6% 350 12.1% 11.6% 8.6% 8.3% 7.5% 10.0% (Bn JPY) 9.9% 6.8% 6.5% 6.8% 10.3% 100 5.9% 300 6.4% 5.0% 8.0% 250 80 0.0% 200 3.0% (Bn
Slide 4: Breakdown of Segment Profits
Breakdown of Segment Profits 74.5 Bn JPY, up by 2% YoY (+1.3 Bn JPY) FY23.3 Q1 Base Profits Significant profit increase in Aircraft and Ships from COVID-19 recovery, growth of leasing business in Segment Profits Asia and Australia also led to higher profits 85.9 Bn JPY -15% YoY 11.4 Bn JPY, down by
Slide 5: Segment Profits
Segment Profits ✓ 5 segments higher YoY, Aircraft and Ships in particular ✓ US and Europe negatively impacted from changes in macro environment, but Asia and Australia ended higher. Overseas profit ratio stable at approx. 40% (Bn JPY) 22.3 Q1 22.3 Q2 22.3 Q3 22.3 Q4 23.3 Q1 QoQ YoY Highlight Segment
Slide 6: Segment Assets
Segment Assets ✓Assets increased, mainly in overseas segments, due to changes in forex ✓Corporate Financial Services continue to be careful in selecting new business, Auto lower from new car supply constraints (Bn JPY) 23.3 Q1 Vs. 22.3 ROA* Highlight Segment Assets Corporate Financial Services Lower
Slide 7: Corporate Financial Services and Maintenance Leasing
Corporate Financial Services and Maintenance Leasing Segment Profits: 15.7 Bn JPY YoY -1.5 Bn JPY (-9％) Segment Assets: 1,486.1 Bn JPY YTD -30.7 Bn JPY (-2%) ✓ Flat YoY, excluding Yayoi ✓ Corporate Financial Services: Continued to be careful in selecting new business deals in low interest rate envir
Slide 8: Real Estate
Real Estate Segment Profits: 11.9 Bn JPY YoY +1.3 Bn JPY (+13%) Segment Assets: 904.2 Bn JPY YTD -5.9 Bn JPY (-1%) ✓ Profits up on sale of logistics facilities and rental condominiums ✓ Asset size largely unchanged as sales, mainly of logistics facilities, ✓ Facilities Operation: Improved occupancy
Slide 9: PE Investment and Concession
PE Investment and Concession Segment Profits: 2.2 Bn JPY YoY +2.0 Bn JPY (+1,284%) Segment Assets: 368.7 Bn JPY YTD +15.1 Bn JPY (+4%) ✓ PE Investment: Profits increased due to steady performance of ✓ Increased due to new investment in HEXEL Works investees and reduction of losses associated with Ko
Slide 10: Environment and Energy
Environment and Energy Segment Profits: 4.6 Bn JPY YoY +0.2 Bn JPY (+6％) Segment Assets: 731.1 Bn JPY YTD +27.5 Bn JPY (+4%) ✓ In Japan, mega solar business performed well due to higher power generation from ✓ Assets increased due to changes in forex good weather ✓ Overseas, electricity selling pric
Slide 11: Insurance
Insurance Segment Profits: 10.9 Bn JPY YoY -4.3 Bn JPY (-28%) Segment Assets: 2,082.2 Bn JPY YTD +10.0 Bn JPY (flat) ✓ Due to Japan experiencing a wave of COVID-19 infections, related payouts to policy ✓ Assets mostly flat holders increased and profits declined ✓ Insurance premium income rose on inc
Slide 12: Banking and Credit
Banking and Credit Segment Profits: 7.2 Bn JPY YoY -4.9 Bn JPY (-41%) Segment Assets: 2,691.5 Bn JPY YTD +4.3 Bn JPY (flat) ✓ Banking: Financial revenues remained steady YoY, but profits fell as there ✓ Assets mostly flat were one-time profits recorded in the previous period ✓ Credit: Profits decrea
Slide 13: Aircraft and Ships
Aircraft and Ships Segment Profits: 5.4 Bn JPY YoY +10.4 Bn JPY (return to the black) Segment Assets: 723.2 Bn JPY YTD +39.1 Bn JPY (+6%) ✓ Ships: Profits increased significantly due to sales of owned ships ✓ Assets increased overall, as forex effects offset sales of owned ships ✓ Aircraft: Improved
Slide 14: ORIX USA
ORIX USA Segment Profits : 6.0 Bn JPY YoY -18.9 Bn JPY (-76%) Segment Assets : 1,554.5 Bn JPY YTD +190.3 Bn JPY (+14%) ✓ Private Equity: Multiple exits in the previous period led to reduction in ✓ Assets increased due to changes in forex capital gains ✓ Maintained a low non-performing ratio ✓ Lument
Slide 15: ORIX USA
ORIX USA ✓ In Q1, selling opportunities in PE investment reduced due to unstable market environment ✓ Real estate loan income fell at Lument as purchases from agencies slowed ✓ Risk-taking being tightened as inflation continues and uncertainty regarding trends in the economy intensify Segment Profit
Slide 16: ORIX Europe
ORIX Europe Segment Profits: 9.3 Bn JPY YoY -4.1 Bn JPY (-31%) Segment Assets: 409.8 Bn JPY YTD +7.9 Bn JPY (+2%) ✓ Fall in stock market resulted in reduced AUM which led to lower profits ✓ Assets increased due to changes in forex Segment Profits Segment Assets・ROA AUM Full-Fiscal Year (Bn JPY) (Bn
Slide 17: Asia and Australia
Asia and Australia Segment Profits : 12.6 Bn JPY YoY +4.1 Bn JPY（+48%） Segment Assets : 1,375.7 Bn JPY YTD +69.6 Bn JPY（+5%） ✓ Car leasing profits increased due to higher prices in used car market ✓ Assets increased due to changes in forex ✓ Sold stake in an affiliate in South East Asia, pushed prof
Slide 18: Impact of COVID-19
Impact of COVID-19 ✓ Aircraft and Ships profits on an upward trend as travel demand in North America and Europe rebounds from COVID-19 ✓ Profits recover in real estate operations, although uncertainty remains following current wave of COVID-19 infections in Japan ✓ Insurance segment profits down YoY
Slide 19: Impact of Macroeconomic Changes
Impact of Macroeconomic Changes ✓ Control market risks through ALM. Pay close attention to market changes impacting businesses ✓ From both credit and business perspective, no signs of asset deterioration, but conducting thorough risk management based on economic environment ✓ Quickly responding to i
Slide 20: Appendix
Appendix Copyright © 2022 ORIX Corporation All rights reserved. 20
Slide 21: Corporate Financial Services and Maintenance Leasing - About the Business
Corporate Financial Services and Maintenance Leasing - About the Business Main business: Finance and fee business; leasing and rental of automobiles, electronic measuring instruments and ICT-related equipment Corporate Financial Services Auto Rentec World leader in vehicles under Core platform for c
Slide 22: Real Estate – About the Business
Real Estate – About the Business Main Business: Real estate development, rental and management; facilities operation; real estate asset management Segment Assets Unrealized gains on rental （as of end-Mar, 2022） Segment Asset Trends properties* Primarily DAIKYO Primarily leased logistics facilities,
Slide 23: PE Investment and Concession – About the Business
PE Investment and Concession – About the Business ✓ Currently invested in 17 companies (as of end-March 2022); aim to develop new business segments for ORIX Investment Track Record Investee Companies Leveraging our broad network and IT Services Initial investment Business Management experience we ha
Slide 24: Global Renewable Energy Portfolio
Global Renewable Energy Portfolio ✓ Total net owned operating capacity of 3.3 GW worldwide （as of end-June 2022） ✓ Total operating capacity (incl. assets in operation, under construction, and in development): Elawan 9 GW, Greenko 18 GW Spain & other locations China Japan USA & other locations ・Elawa
Slide 25: Life Insurance – About the Business
Life Insurance – About the Business ✓ Omni-channel strategy (including online/mail order) has allowed ORIX Life to post growth in policies well above industry average ✓ Shift from mix dominated by third-sector products (such as medical insurance CURE) to a more well-balanced portfolio with introduct
Slide 26: Banking – About the Business
Banking – About the Business ✓ In addition to its mainstay real-estate investment loan business, ORIX Bank is strengthening its financing business to industries which support a sustainable society ✓ By utilizing its trust banking license, will develop and sell financial products, such as securitized
Slide 27: Aircraft and Ships – About the Business
Aircraft and Ships – About the Business GLOBALLY NARROWBODY OEM DIVERSE WEIGHTING BREAKDOWN Owned Committed （NBV） （number of aircraft） （number of aircraft） fleet fleet ORIX Aviation 53 0 ✓ Fully-owned subsidiary 14% 21% Average age ✓ Mainly trading in second-hand 36% 6.4 years market 42% ✓ Arrangeme
Slide 28: ORIX USA – About the Business
ORIX USA – About the Business ✓ A provider of capital and financing solutions to middle market companies in USA, targets growth in asset management for three key verticals (total AUM / AUA $74.1 Bn) ✓ Operates a hybrid strategy, investing own principal capital while providing capital market and asse
Slide 29: ORIX Europe – About the Business
ORIX Europe – About the Business ✓ Main Business: Equities, fixed income, renewable energy and other fund management ✓ Actively promoting ESG investing, especially through Robeco and Gravis Capital Management An ESG pioneer since the mid-1990s, Robeco is Major Subsidiaries Head Office Primary Busine
Slide 30: Asia and Australia – About the Business
Asia and Australia – About the Business ✓ Main Business: Leasing, lending, and investment businesses in Asia and Australia ✓ Leasing, loans: Primarily industrial equipment and auto leasing across Asia and Australia. Investments: PE investments mainly in Greater China and South Korea Segment Assets b
Slide 31: About ORIX: Proven Track Record of Profitability
About ORIX Proven Track Record of Profitability ✓ Excluding founding year, ORIX has been profitable for 57 straight years Net Income Attributable to ORIX Corporation Shareholders JPY Bn FY2021.3 COVID-19 crisis 350 300 250 FY2002.3 FY2009.3 Burst of IT bubble Global financial crisis 200 150 FY1998.3
Slide 32: 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 © 2022 ORIX Corporation All rights reserved. 32
Slide 33: About ORIX: Global Network
About ORIX Global Network ✓ Using its expertise cultivated in Japan, ORIX has expanded its business globally, with operations in 28 countries and regions worldwide Copyright © 2022 ORIX Corporation All rights reserved. 33
Slide 34: Medium-term Direction: Earnings Targets and Shareholder Returns
Medium-term Direction: Earnings Targets and Shareholder Returns (From FY22.3 full-year results presentation announced in May 2022, partially updated) FY21.3 FY22.3 FY25.3 Targets Net Income 192.4 Bn JPY 312.1 Bn JPY 440.0 Bn JPY (Segment Profits) (311.3 Bn JPY) (531.4 Bn JPY) (620.0 Bn JPY)*1 ROE 6.
Slide 35: Medium- to Long-term Growth
Medium- to Long-term Growth (From FY22.3 full-year results presentation announced in May 2022) ✓ Operation & Investment and Asset Management positioned as growth drivers, aim to achieve 440.0 Bn JPY in net income by FY25.3 ✓ After FY25.3, will sustain growth into FY30.3 supported by new investments
Slide 36: Three Portfolio Categories
Three Portfolio Categories (Breakdown of Financing & Insurance, Asset Management, Operation and Investment) Three Categories Three Category and Segment Matrix Financing & Insurance Asset Management Operation & Investment Corporate Financial Services and Auto, rental equipment, Corporate financial se
Slide 37: COVID-19 Impacted Businesses - Macro Indicators
COVID-19 Impacted Businesses - Macro Indicators Dominant Business Macro Indicator recovery factor Global travelers (vs 2019, announced by ICAO) 100% N. America Europe Asia Aircraft and 80% Ships 60% Passenger demand (aircraft leasing) 40% (US, Europe, Asia) 20% 0% 2020/04 2020/07 2020/10 2021/01 202
Slide 38: Breakdown of Investment Gains
Breakdown of Investment Gains Investment Gains* Major Business Sales (Bn JPY) Segment FY18.3 FY19.3 FY20.3 FY21.3 FY22.3 No. Company Timing of sale ORIX Electric Power ① FY18.3 Real estate 42.9 ② 56.5 ③ 53.6 16.9 21.4 Corporation ② ORIX Golf Management FY19.3 PE and concession 26.9 0.3 16.4 -0.7 -19
Slide 39: Funding Structure / Employed Capital Ratio
Financials Funding Structure / Employed Capital Ratio ✓ Diversified funding methods and maintained a high long-term debt ratio Funding Structure and Long-term Debt Ratio*1 Shareholders’ Equity / Employed Capital Ratio*2 93% 93% 93% 91% 89% 4.5 88% 88% 86% 87% 4.0 85% 7.6 (JPY Tn) 7.0 7.1 6.8 3.5(JPY
Slide 40: Funding Structure
Financials Funding Structure ✓ Diversified funding. Controlled funding costs while maintaining a high long-term debt ratio Breakdown of Funding Trends in Fundings Costs Foreign currency funding costs Deposits Yen funding costs 30% Borrowings from financial 3.27% 3.28% FY23.3 Q1 institutions 2.76% 2.
Slide 41: D/E Ratio & Credit Ratings
Financials D/E Ratio & Credit Ratings ✓ Since global financial crisis, have realized ROE growth while controlling D/E ratio D/E Ratio・ROE Credit Ratings 3.8x End-March 2022 3.4x 11.5% 10.5% 11.7% 12.1% 11.3% 11.6% S&P A- (Stable) 2.7x 10.3% 9.9% 7.4% Moody’s A3 (Stable) 6.2% 6.4% 2.2x Fitch A- (Stab
Slide 42: Shareholder Returns
Shareholder Returns ✓ FY23.3 full-year dividend: 85.6 JPY per share (previous fiscal year’s dividend) or a dividend payout ratio of 33%, whichever is higher ✓ Share buybacks to be carried out opportunistically, 50 Bn JPY planned for FY23.3 (17.3 Bn JPY already carried out as of end-July 2022) Divide
Slide 43: 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 44: 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 Investor Relations and Sustainability Department Tel: +81-3-3435-3121 44 Company Name Copyri