ORIX Corporation. First Quarter Consolidated Financial Results For the Three-Month Period Ended June 30, 2017

Transcription

1 ORIX Corporation First Quarter Consolidated Financial Results For the Three-Month Period Ended June 3, 217 Kazuo Kojima Deputy President & CFO Shintaro Agata Corporate Executive Vice President, Head of Treasury and Accounting Headquarters Takao Kato Corporate Senior Vice President, Deputy Head of Treasury and Accounting Headquarters July 31, 217 (TSE: 8591; NYSE: IX)

2 Overview(1) 89.7bn yen in net income, up by 17% YoY Annualized ROE at 14.3% Net Income* and ROE 1 15.% 14.3% 13.2% Q Q Q1 Net Income ROE (annualized) *Net Income refers to Net Income Attributable to ORIX Corporation Shareholders 1

3 Overview(2) Segment profits at 134.5bn yen, up by 17% YoY Significant growth in Overseas Business, Real Estate and Retail Corporate Financial Services and Maintenance Leasing performed steadily Decreased in Investment and Operation due to the absence of the capital gain from PE investment in this quarter Segment Profits Overseas Business 1 5 Retail Investment and Operation Real Estate Maintenance Leasing Corporate Financial Services 16.3 Q Q Q1 2

4 Overview(3) Segment assets at 8,91.3bn yen, down by 1% YTD Decreased in Retail assets due to the sale of investment securities by ORIX Life Insurance (OLI) and HLIKK s run-off business Segment Assets ROA rose to 4.% (JPY Tn) Segment Assets and ROA 4.% 3.6% 3.5% 3.% 16.3 Q Q Q Q1 4.2% 3.7% 3.2% 2.7% 2.2% 1.7% 1.2%.7%.2% -.3% Overseas Business Retail Investment and Operation Real Estate Maintenance Leasing Corporate Financial Services Segment ROA (annualized and after-tax) 3

5 Overview(4) Pretax profits: 17.2bn yen increase YoY (+15%) Concession business, income from PE investment and Environment and energy business made positive contribution as part of the existing operation Profit of HLIKK decreased sharply due to the market fluctuation in the same period last FY Segment assets: 55.5bn yen decrease YTD ( 1%) Increased in aircraft and ship-related business as well as auto-related business and banking business in existing operation Existing operation (incl. new investees) YoY Changes in Pretax Profits 27.5 Gains on sales of investments and others Gains on sales of RE* Gains on sales of investments and others in FY17.3 Q1 17.2bn yen increase YoY (+15%) 18.4 Gains on sales of RE* in FY17.3 Q1 * Gains on sales of real estate includes "gains on sales of rental property", "gains on investment securities","gains on sales of property under facility operations", "gains on sales of subsidiaries and affiliates and liquidation losses", and "gains on sales of equity method affiliates"(excl. condominium related gains) under Real Estate segment 1.5 Foregin exchange impact Q Q1 8, Existing operation (incl.new investees) YTD Changes in Segment Assets Securitization HLIKK Sales of investments 8, RE 55.5bn yen decrease YTD ( 1%) Foregin exchange impact 4

6 Segment Performance(1)Corporate Financial Services Segment profits: 1.2bn yen, up by 1.7bn yen YoY (+2%) Increased in services income YoY Gains on sales of shares of affiliates were recognized (approximately 2.bn yen) Segment assets: 1,7.4bn yen, down by 24.7bn yen YTD ( 2%) Installment loan balance decreased Segment Revenues/Profits JPY Bn) Q Q Q1 Finance revenues Services income Others Segment profits Services Income Segment Assets/ROA 1, , % 8 2.7% % Yayoi 2.2% Q Q Q Q Q Q Q1 Direct financing leases Installment loans Goodwill & other Others intangible assets Segment ROA (annualized and after-tax) 5

7 Segment Performance(2)Maintenance Leasing Segment profits: 9.9bn yen, remained flat YoY (+%) Revenue from auto-related business increased due to the increase of assets, despite of lower gains on sales of used cars Segment assets: 759.6bn yen, up by 7.1bn yen YTD (+1%) Increased in new auto leases Segment Revenues/Profits Segment Assets/ROA 4.6% 3.8% 3.7% 3.6% 5.% 4.5% 4.% 3.5% 3.% % 2.% % 1.% 16.3 Q Q Q1 Operating leases revenues Services income Others Segment profits.5%.% 16.3 Q Q Q Q1 Operating leases Direct financing leases Others Segment ROA (annualized and after-tax) 6

8 Segment Performance(3)Real Estate Segment profits: 32.8bn yen, up by 9.2bn yen YoY (+39%) Realized gains from well-timed sales of real estate assets Segment assets: 655.9bn yen, down by 1.8bn yen YTD ( %) Assets decreased due to rental property sales Segment Revenues/Profits , Segment Assets/ROA 8.9% 7.1% 4.7% 13.7% 16.% 14.% 12.% 1.% 8.% 6.% 4.% 2.% 16.3 Q Q Q1 Gains on rental property sales Services income Segment profits Operating leases revenues (excl. gains on rental property sales) Others 16.3 Q Q Q Q1 Rental property Operating facilities Others Segment ROA (annualized and after-tax).% 7

9 Segment Performance(4)Investment and Operation Segment profits: 16.7bn yen, down by 14.3bn yen YoY ( 46%) Profit from environment and energy business and concession business increased steadily, while the profit in PE investment decreased due to the absence of the large capital gain in this quarter Segment assets: 768.4bn yen, down by.3bn yen YTD ( %) Assets in environment and energy business increased, while investment securities decreased 5 4 Segment Revenues/Profits Segment Assets/ROA 11.1% 12.2% 14.% 12.% 1.% % 8.% 5.9% 6.% 4.% % 16.3 Q Q Q1 Others Services income Sales of goods and real estate Segment profits 5...% 16.3 Q Q Q Q1 Loan servicing Principal investment Environment and energy Othes (incl. Daikyo, Concession) Segment ROA (annualized and after-tax) 8

10 Segment Performance(5)Retail Segment profits: 22.bn yen, up by 9.5bn yen YoY (+76%) Life insurance premiums increased Profits of HLIKK also increased compared to previous fiscal year when its profits dropped sharply Segment assets: 3,21.7bn yen, down by 89.9bn yen YTD ( 3%) Assets decreased due to sales of bonds in OLI and run-off in HLIKK portfolio Increased in banking business Segment Revenues/Profits Life Insurance Premiums and Related Investment Income 9 6 HLIKK portion 4, 3, 2, Segment Assets/ROA 1.6% 1.% 1.5% 1.9% 2.5% 2.% 1.5% 1.%.5% 1 3 1,.% Q Q Q1 Others Finance revenues Life insurance premiums and related investment income Segment profits Q Q Q Q Q Q Q1 Banking and consumer finance Life Insurance HLIKK portion Segment ROA (annualized and after-tax) -.5% -1.% 9

11 Segment Performance(6)Overseas Business Segment profits: 42.9bn yen, up by 13.bn yen YoY (+44%).5bn yen increased due to FX rate fluctuation Gains on sales of Asian PE investment and Houlihan Lokey shares were recognized Segment assets: 2,58.3bn yen, up by 54.1bn yen YTD (+2%) 15.6bn yen increased due to FX rate fluctuation Assets of aircraft and ship-related operation increased, while assets of securities decreased due to sales of investment securities in the Americas 2 Segment Revenues/Profits ,5 Segment Assets/ROA 6.% 5.5% , 1,5 1, 5 4.2% 3.7% 3.2% 4.7% 5.% 4.5% 4.% 3.5% 3.% 2.5% 2.% 16.3 Q Q Q1 Finance revenues Services income Operating leases Others Segment profits 1.5% 16.3 Q Q Q Q1 The Americas Asia and Australia Greater China Middle East and Europe Robeco Others (incl. Aircraft and Ships) Segment ROA (annualized and after-tax) 1

12 Performance in Three Categories See P.35 for details on the three categories Operation: Profit growth in environment and energy business, concession business, Life insurance and Robeco Investment: Strong profit growth in Tangible assets such as real estate and aircraft, while gain on sales of equity investment decreased YoY Segment Profits (3 Categories) Finance Operation Investment 5 Ex-Japan Japan ROA % 1.8% 1.7% 16.3 Q Q Q Others Maintenance Services Environment/Infrastructure Financial Services ROA 4.9% 4.5% 16.3 Q Q Q1 5.5% 8 Equity Tangible Assets Fixed Income ROA 8.5% 7.8% 6 6.4% Q Q Q1 (*1) FY16.3 Q1 and FY17.3 Q1 Segment Profits in Operation excludes ordinary profit/loss contribution from HLIKK (*2) FY18.3 Q1 Segment Profits in Operation excludes capital gain from the sale of Houlihan Lokey shares and ordinary profit/loss contribution from HLIKK 11

13 Financials (1) Funding Structure Lengthening and stabilization of funding Funding cost control Breakdown of Funding, Trend in Share of Longterm Debt and Funding Cost Funding Composition As of June 3,

14 Financials (2) Liquidity on hand Maintained high level of liquidity. Liquidity( ) vs Short-Term Capital Market Liabilities ( ) Excluding ORIX Bank and ORIX Life Insurance 13

15 Financials (3) Bond Issuances and Maturity Ladder Promote diversification on funding sources Issued bonds in right market by appropriate currency to support business development Bonds issued in FY218.3 Q1 ORIX /Domestic Bond Local Subsidiary/ Bond MTN Bonds issued in July 217 include followings ORIX/Overseas Bond Issued Amount Maturity Ladder (As of June 3,217) Term (year) Issued to Coupon T Spread #19 May 1, 217 JPY 2. bil 5 Retail.15% - #191 April 2, 217 JPY 1. bil 5 Institutional.15% - #192 June 22, 217 JPY 3. bil 5 Retail.15% - JPY 6. bil Korea Won Bond April 11, 217 KRW 1,mil (JPY 1. bil) 2 Institutional 1.961% - Korea Won Bond April 11, 217 KRW 2,mil (JPY 2. bil) 5 Institutional 2.518% - India Rupee Bond April 26, 217 INR 1,mil (JPY 1.8 bil) 2 Institutional 8.1% - Malaysia Ringgit MTN May 5, 217 MYR 45mil (JPY 1.2 bil) 2 Institutional 4.3% - Korea Won Bond June 8, 217 KRW 1,mil (JPY 1. bil) 2 Institutional 1.941% - Korea Won Bond June 8, 217 KRW 1,mil (JPY 1. bil) 5 Institutional 2.477% - JPY 7.8 bil U.S.Dollars July 18, 217 USD 75mil (JPY 84. bil) 5 Institutional 2.9% - U.S.Dollars July 18, 217 USD 5mil (JPY 56. bil) 1 Institutional 3.7% - JPY 14. bil 14

16 Financials (4) Asset Quality Non-performing loan ratio continues to improve Coverage Ratio of Loans Individually Evaluated for Impairment Changes in Non-Performing Loan Ratio Loans individually evaluated for impairment (a) Estimated collectable amount * 37.3 Amount covered by collaterals such as real estate Coverage (b) Amount covered by collaterals such as real estate Valuation Allowance (Provision) Coverage ratio (b)/(a) 85.8% 87.5% 87.4% The amount consists of loans individually evaluated for impairment which is covered by collaterals such as real estate (JPY 3.Bn), and receivable which cashflow is expected to be collected other than collateral disposal (JPY 7.3Bn). 15

17 Summary Q1 net income achieved at 89.7bn yen, up 17% YoY, annualized ROE at 14.3% Continuously focus on Operation and Investment Establish a cycle for generating stable earnings while turning over assets 16

18 Appendix 17

19 About ORIX Proven Track Record of Profitability ORIX has achieved 52 years of sustained, profitable growth JPY Bn 3 Net Income Attributable to ORIX Corporation Shareholders FY Japan's bubble economy implodes FY Asian currency crisis FY22.3 IT Bubble implodes FY29.3 Global financial crisis

20 About ORIX Evolving and Dynamic Portfolio ORIX will continue to enhance our experience in finance and tangible assets as we synergistically expand our businesses Infrastructure 19

21 About ORIX Business by Segment Our highly diversified company contains many complementary businesses, providing ample opportunity for synergies and knowledge sharing Corporate Financial Services Maintenance Leasing Real Estate Loan, Leasing, Fee businesses Automobile leasing and rentals, Car sharing, Test and measurement instruments and IT-related equipment rentals and leasing Real estate development and rental, facility operation, REIT asset management, and real estate investment advisory services 9% 27% 1% Segment Profits 421 bn yen 17% FY % 2% Investment and Operation Retail Environment and energy business, Principal investment and Loan servicing, Concession Life insurance, Banking, Card loan 12% 27% Segment Assets 9 tn yen 8% 7% Overseas Business Leasing, Loan, Bond investment, Asset management, Aircraft and Ship-related operations FY % 9% 2

22 About ORIX Global Network ORIX has spread its business globally by expanding operations in 36 countries and regions worldwide (As of ) 21

23 Appendix (1) Performance Overview *1 Net Income Attributable to ORIX Corporation Shareholders FY16.3 FY Q Q1 Change (YoY) Total Revenues 2, , % Net Income * % Segment Assets 8, , ,57.2 8, % Total Assets 1, , , , % Shareholders' Equity 2,31.4 2,57.7 2,327. 2, % Shareholders' Equity Ratio 21.% 22.3% 21.6% 22.3% +.7% ROE 11.7% 11.3% 13.2% 14.3% 1.1% Return on Segment Assets (ROA) 2.87% 3.5% 3.5% 4.2%.52% D/E Ratio 1.9x 1.7x 1.8x 1.7x -.1x 22

24 Appendix (2) Profits by Segment FY16.3 FY Q Q1 Change (YoY) Corporate Financial Services % Maintenance Leasing % Real Estate % Investment and Operation % Retail % Overseas Business % Total Segment Profits % 23

25 Appendix (3) Assets by Segment Change (YTD) Corporate Financial Services 1,49.9 1,32.2 1,33.2 1,7.4 98% Maintenance Leasing % Real Estate % Investment and Operation % Retail 3, , , , % Overseas Business 2, , ,67.8 2, % Total Segment Assets 8, , ,57.2 8, % 24

26 Appendix (4) Income Statement Data *1 Each revenue component deducted with corresponding costs and expenses FY16.3 FY Q Q1 Change (YoY) Finance revenues % Gains on investment securities and dividends % Operating leases % Life insurance premiums and related investment income % Sales of goods and real estate % Services income % Gross Profits* % Interest expense % Selling, general and administrative expenses % Provisions/Impairments % Other (income) and expense, net % Operating Income % Equity in Net Income of Affiliates % Gains on Sales of Subsidiaries and Affiliates etc % Income before Income Taxes % Net Income Attributable to ORIX Corporation Shareholders % 25

27 Appendix (5) Funding *1 Marketable Short-term Debt is the total of bonds and MTN expected to reach maturity within 1 year and the balance of CP. Change Funding (YoY) CP Borrowings from Financial Institutions 2,97.6 2, , , Bonds / MTN Deposits 1, , , , ABS, CMBS Short-term Debt, Long-term Debt and Deposits 5,685. 5, , , Share of Long-Term Debt 92% 93% 94% 91% -3% Liquidity (excl. ORIX Bank, ORIX Life Insurance) Change (YoY) Cash and Cash Equivalents (1) Available Commitment Line (2) Liquidity (1+2) ,28.1 1, Marketable Short-term Debt (3) * Liquidity Coverage Ratio (1+2)/(3) 27% 337% 37% 32% -5% Funding Costs (including Deposits) FY16.3 FY Q Q1 Change (YoY) Domestic Currency.64%.5%.55%.42% -.13% Foreign Currency 2.74% 2.8% 2.74% 2.74%.% 26

28 Appendix (6) Corporate Financial Services FY16.3 FY Q Q1 Change (YoY) Finance revenues % Operating leases % Services income % Sales of goods and real estate and others % Segment Revenues % Segment Expenses % Segment Profits % Investment in Direct Financing Leases Installment Loans Segment Assets 1,49.9 1,32.2 1,33.2 1,7.4 ROA 2.59% 2.5% 2.23% 2.74% 27

29 Appendix (7) Maintenance Leasing FY16.3 FY Q Q1 Change (YoY) Finance revenues % Operating leases % Services income % Segment Revenues % Segment Expenses % Segment Profits % Investment in Direct Financing Leases Investment in Operating Leases Segment Assets ROA 4.1% 3.66% 3.78% 3.58% 28

30 Appendix (8) Real Estate (1) FY16.3 FY Q Q1 Change (YoY) Finance revenues % Operating leases % Gains on Rental Property Sales % Services income % Sales of goods and real estate and others % Segment Revenues % Segment Expenses % Segment Profits % Investment in Operating Leases Property under Facility Operations Advances for Investment in Operating Leases Investment in Affiliates Segment Assets ROA 3.62% 7.12% 8.92% 13.66% 29

31 Appendix (9) Real Estate (2) Breakdown of Real Estate Segment Assets Change (YTD) Rental Property % Under Lease % Under Development % Operating Facilities % Hotels and Inns % Golf Courses % Others % Others % Total % Rental Property Sales/Gains FY16.3 FY Q Q1 Change (YoY) Amount of Rental Property Sales % Gains on Rental Property Sales % 3

32 Appendix (1) Investment and Operation FY16.3 FY Q Q1 Change (YoY) Finance revenues % Gains on investment securities and dividends % Sales of goods and real estate % Services income % Segment Revenues 1,28.4 1, % Segment Expenses , % Equity in Net Income of Affiliates and others % Segment Profits % Installment Loans Investment in Securities Property under Facility Operations Inventories Investment in Affiliates Segment Assets ROA 5.58% 7.88% 12.23% 5.92% 31

33 Appendix (11) Retail FY16.3 FY Q Q1 Change (YoY) Finance revenues % Life insurance premiums and related investment income % Services income and others % Segment Revenues % Segment Expenses % Equity in Net Income of Affiliates and others Segment Profits % Installment Loans 1, , , ,764.7 Investment in Securities 1, ,59.2 1,767. 1,374. Segment Assets 3, , , ,21.7 ROA.96% 1.47% 1.% 1.85% 32

34 Appendix (12) Overseas Business (1) FY16.3 FY Q Q1 Change (YoY) Finance revenues % Gain on investment securities and dividends % Operating leases % Services income % Segment Revenues % Segment Expenses % Equity in Net Income of Affiliates and others % Net Income Attributable to Redeemable Noncontrolling Interests Segment Profits % Investment in Direct Financing Leases Installment Loans Investment in Operating Leases Investment in Securities Investment in Affiliates Segment Assets 2, , ,67.8 2,58.3 ROA 4.26% 3.24% 3.75% 4.72% 33

35 Appendix (13) Overseas Business (2) Overseas Business segment assets breakdown By Region Change (YTD) The Americas % Asia and Australia % Greater China % Middle East and Europe % Robeco % Aircraft and Ships % Others % Total 2, , ,67.8 2, % 34

36 Appendix (14) Business Portfolio in Three Categories Categories Main Risk Capital Requirement Finance Operation Investment Credit risk Operation/Business risk Market risk Low Medium-High High Japan Overseas Environment/ Infrastructure Financial Services Maintenance Services Others Fixed Income Tangible Assets Equity Corporate Financial Services Leasing, Loan, Fee business Yayoi New business development Maintenance Leasing ORIX Auto, ORIX Rentec Segments Real Estate Investment and Operation Facilities operation Environment and energy, Concession REIT, RE investment advisory Loan servicing RE investment PE investment, Daikyo Retail Banking, Consumer finance, Gurantee Life insurance, HLIKK Overseas Business Leasing, Loan Asset Management, Houlihan Lokey Bond investment Aircraft, Ships PE investment 35

37 Appendix (15) Usage of Shareholders Equity Employed capital ratio* is controlled within the range meeting single A rating requirement Secure c.2% as a capital buffer for financial soundness and flexibility *ORIX calculation (Risk Capital/Shareholders Equity) Employed Capital Ratio Breakdown of Capital Employed 17.3 Shareholders Equity 2,58 Employed 2,135 Unemployed 373 Employed Capital Ratio 85.1% 16% 33% % 14% Finance Operation(Ex-Robeco) Robeco Investment 36

38 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, warranties or undertakings, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness, or completeness, or correctness of the information or the opinions presented or contained in these materials. These materials contain forward-looking statements that reflect the Company s intent, belief and current expectations about future events and financial results. These statements can be recognized by the use of words such as expects, plans, will, estimates, projects, intends, or words of similar meaning. These forward-looking statements are not guarantees of future performance. They are based on a number of assumptions about the Company s operations and are subject to risks, uncertainties and other factors beyond the Company s control. Accordingly, actual results may differ materially from these forward-looking statements. Factors that could cause such differences include, but are not limited to, those described under Risk Factors in the Company s most recent annual report on Form 2-F filed with the U.S. Securities and Exchange Commission and under Business Risk of the securities report (yukashouken houkokusho) filed with the Director of the Kanto Local Finance Bureau. Some of the financial information in these materials is unaudited. The Company believes that it will be considered a passive foreign investment company for United States Federal income tax purpose in the year to which these consolidated financial results relate and for the foreseeable future by reason of the composition of its assets and the nature of its income. A U.S. holder of the shares or ADSs of the Company is therefore subject to special rules generally intended to eliminate any benefits from the deferral of U.S. Federal income tax that a holder could derive from investing in a foreign corporation that does not distribute all of its earnings on a current basis. Investors should consult their tax advisors with respect to such rules, which are summarized in the Company s annual report. ORIX Life Insurance has completed merger proceeding on its subsidiary Hartford Life Insurance K.K. on July 1, 215 and is committed to continue serving its policy holders. ORIX Life insurance has no affiliation with The Hartford Financial Services Group, Inc. or its affiliates. Nothing in this document shall be considered as an offer to sell or solicitation of an offer to buy any security, commodity or other instrument, including securities issued by the Company or any affiliate thereof. 37

39 For the current IR materials and archives of past financial data please access our website ORIX Website IR Section ORIX Corporation Corporate Planning Department World Trade Center Building., 2-4-1, Hamamatsu-cho, Minato-ku, Tokyo , Japan Tel: Fax: ORIX Corporation Copyright 216 ORIX Corporation All rights reserved.