Orix Corporation · TSE:8591

Orix — FY2016.3 Earnings Presentation

46 slides from Orix's earnings presentation, May 11, 2016

  1. Slide 1: Consolidated Financial Results for the Fiscal Year Ended March 31, 2016

    ORIX Corporation (TSE: 8591; NYSE: IX) Consolidated Financial Results For the Consolidated Fiscal Year Ended March 31, 2016 May 11, 2016 Makoto Inoue President & CEO Kazuo Kojima Deputy President & CFO Copyright © 2016 ORIX Corporation All rights reserved.

  2. Slide 2: FY2016.3 Overview (1)

    FY2016.3 Overview (1)  260.2bn yen in net income (10.8% growth YoY)  New record high and growth in seven consecutive years. Profit growth driven by steady growth in both existing and new businesses  Steady progress toward the net income target of 300bn yen in FY18.3 Net Income* and ROE (JPY Bn) 1

  3. Slide 3: FY2016.3 Overview (2)

    FY2016.3 Overview (2)  Profits: Excluding Retail, all other five segments had profit increase  Assets: Decrease in Retail due to HLIKK; Increase in Maintenance Leasing, Investment and Operation, and Overseas Business Segment Profits Segment Assets and ROA (JPY Tn) (JPY Bn) 10 2.9% 2.9% Overseas 3.

  4. Slide 4: FY2016.3 Overview (3)

    FY2016.3 Overview (3)  Pretax profits: 47.3bn yen increase YoY (+14%) • Similar level of capital gains as last FY. Expansion of existing and new businesses contributed to the overall profit growth  Segment assets: 197.8bn yen decrease YoY (▲2%) • Growth mainly in auto-business, environment & energ

  5. Slide 5: Business Portfolio in Three Categories (1)

    Business Portfolio in Three Categories (1)  Viewing the business portfolio with a new angle  Categorizing the businesses into “Finance”, “Operation”, and “Investment” Finance Operation Investment Main Risk Credit risk Operation/Business risk Market risk Categories Capital Low Medium High Requireme

  6. Slide 6: Business Portfolio in Three Categories (2)

    Business Portfolio in Three Categories (2)  Profits: While there were volatility caused by certain capital gains, contribution from “Operation” on the pretax profits has been increasing steadily  Assets: Solid growth in Operation assets excluding impact from HLIKK’s run off business Pretax Profits

  7. Slide 7: Mid-Term Strategic Directions FY16.3 Review

    Mid-Term Strategic Directions FY16.3 Review  FY16.3 proved to be a solid step forward towards FY18.3 net income target of 300bn yen Expansion in Non-Finance Business Organic Growth Investment in Key Areas Environment • Secured 890MW of solar power generation capacity, of which 410MW is in operation

  8. Slide 8: Mid-Term Strategic Directions Value Creation Towards FY18.3

    Mid-Term Strategic Directions Value Creation Towards FY18.3 Finance • Shifting towards services income by enhancing fee earning services line-up • Focus on completing mega solar projects and strengthening of captive power capacity Environment/ • Strengthen the market position as a major renewable en

  9. Slide 9: Shareholder Return

    Shareholder Return  Dividend in FY16.3 increased to 45.75 yen per share (+27% YoY)  Dividend payout ratio rose to 23%  Interim dividend for FY17.3 is forecasted at 23 yen per share (FY16.3 is 22 yen)  Constantly considering the optimal balance between investment opportunities for sustainable fut

  10. Slide 10: Financials (1) Funding Structure

    Financials (1) Funding Structure  Lengthening and stabilization of funding  Funding cost control Breakdown of Funding*, Trend in Share of Funding Composition* Long-term Debt* and Funding Cost JPY Tn 6 5 As of March 31, 2016 4 3 2 1 0 13.3 14.3 *Funding Balance and Share of Long-term Debt Exclude A

  11. Slide 11: Financials (2) Liquidity on hand

    Financials (2) Liquidity on hand  Maintained high level of liquidity. Liquidity vs Short-Term Capital Market Liabilities Copyright © 2016 ORIX Corporation All rights reserved. 10

  12. Slide 12: Financials (3) Bond Issuances and Maturity Ladder

    Financials (3) Bond Issuances and Maturity Ladder  Issued by best issuer and currency to support business development, and promote diversification on funding sources ■Bonds issued in FY2016.3 Times of Term Total Amount Issued to Coupon Issuance (year) 【ORIX /Domestic Bond】 #184 #185 2 JPY 75.0 bil

  13. Slide 13: Financials (4) Asset Quality

    Financials (4) Asset Quality  Coverage ratio against loans individually evaluated for impairment is 86%  Non-performing loan ratio continues to improve Coverage Ratio of Loans Individually Changes in Non-Performing Evaluated for Impairment Loan Ratio （JPY Bn） 14.3 15.3 16.3 Loans individually eval

  14. Slide 14: Summary

    Summary New record high net income for FY16.3, profit growth in seven consecutive years, ROE at 11.7% Continue to focus on “Operation” and “Investment” towards net income target of 300bn yen by FY18.3 Establish a foothold in the next sustainable growth stage, by focusing on the “Operation” field, an

  15. Slide 15: Appendix

    Appendix Copyright © 2016 ORIX 14 Corporation All rights reserved. 14

  16. Slide 16: About ORIX Sustainable Growth

    About ORIX Sustainable Growth  Maintaining profitable for the past 51 years and achieving sustainable profit growth Net Income Attributable to ORIX Corporation Shareholders FY2016.3 Record Net Income JPY Bn FY2009.3 300 Collapse of Lehman Brothers 250 FY2002.3 Bursting of the IT Bubble 200 FY1998.3

  17. Slide 17: About ORIX Business Expertise and Group-Wide Capability

    About ORIX Business Expertise and Group-Wide Capability ORIX evolved by advancing 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 turnaround Co

  18. Slide 18: About ORIX Assets by Segment

    About ORIX Assets by Segment  Maximizing core competencies of each segment while creating group synergy Corporate Financial Services Lending, Leasing, fee businesses Overseas Business 12% 25% Leasing, Lending, Investment 8% Maintenance Leasing in bonds, Asset management, Ship/Aircraft-related Segme

  19. Slide 19: About ORIX Extensive Overseas Network

    About ORIX Extensive Overseas Network  Expanded its global reach starting with Hong Kong in 1971, using knowhow developed in Japan 36 Countries and Regions worldwide (As of 2016.3.31) 1971 Hong Kong 1972 Singapore 1994 Oman 1973 Malaysia 1995 Poland Business Network 1975 Indonesia 1997 Egypt 1981 E

  20. Slide 20: Performance Overview

    Appendix (1) Performance Overview （JPY Bn） FY14.3 FY15.3 FY16.3 Change Total Revenues 1,375.3 2,174.3 2,369.2 109% Net Income *1 187.4 234.9 260.2 111% Segment Assets 7,267.8 9,170.2 8,972.4 98% Total Assets 9,067.0 11,443.6 10,996.9 96% Shareholders' Equity 1,919.3 2,152.2 2,310.4 107% Shareholders

  21. Slide 21: Profits by Segment

    Appendix (2) Profits by Segment （JPY Bn） FY14.3 FY15.3 FY16.3 Change Corporate Financial Services 24.9 25.5 42.4 166% Maintenance Leasing 37.1 40.4 42.9 106% Real Estate 18.0 3.5 42.9 1231% Investment and Operation 95.8 42.4 57.2 135% Retail 49.9 120.6 51.8 43% Overseas Business 69.7 104.1 142.9 137

  22. Slide 22: Assets by Segment

    Appendix (3) Assets by Segment （JPY Bn） FY14.3 FY15.3 FY16.3 Change Corporate Financial Services 992.1 1,132.5 1,049.9 93% Maintenance Leasing 622.0 662.9 731.3 110% Real Estate 962.4 835.4 739.6 89% Investment and Operation 552.2 660.0 704.2 107% Retail 2,167.0 3,700.6 3,462.8 94% Overseas Business

  23. Slide 23: Income Statement Data

    Appendix (4) Income Statement Data （JPY Bn） FY14.3 FY15.3 FY16.3 Change Finance revenues 191.7 186.9 200.9 107% Gains on investment securities and dividends 27.2 56.4 35.8 63% Operating leases 114.0 124.9 128.8 103% Life insurance premiums and related investment income 47.1 79.5 68.1 86% Sales of go

  24. Slide 24: Funding

    Appendix (5) Funding （JPY Bn） Funding FY14.3 FY15.3 FY16.3 Change CP 101.0 89.6 102.4 12.7 Borrowings from Financial Institutions 2,631.4 2,882.6 2,972.0 89.4 Bonds / MTN 1,174.8 1,153.9 940.2 -213.7 Deposits 1,206.4 1,287.4 1,398.5 111.1 Short-term Debt, Long-term Debt and Deposits (excl.ABS,CMBS)

  25. Slide 25: Corporate Financial Services

    Appendix (6) Corporate Financial Services （JPY Bn） FY14.3 FY15.3 FY16.3 Change Finance revenues 37.2 35.6 34.2 96% Operating leases 25.6 24.5 25.5 104% Services income 14.9 22.0 35.7 162% Gains on investment securities and 1.1 3.4 11.7 344% dividends and others Segment Revenues 78.8 85.5 107.2 125%

  26. Slide 26: Maintenance Leasing

    Appendix (7) Maintenance Leasing （JPY Bn） FY14.3 FY15.3 FY16.3 Change Finance revenues 9.5 11.1 12.1 109% Operating leases 177.1 185.7 188.8 102% Services income 60.3 62.5 66.8 107% Segment Revenues 251.3 263.5 271.7 103% Segment Expenses 214.3 223.0 228.7 103% Segment Profits 37.1 40.4 42.9 106% In

  27. Slide 27: Real Estate (1)

    Appendix (8) Real Estate (1) （JPY Bn） FY14.3 FY15.3 FY16.3 Change Finance revenues 6.1 4.1 6.7 166% Operating leases 66.6 63.8 60.3 94% Gains on Rental Property Sales 13.8 14.9 16.1 107% Services income 101.8 104.1 110.6 106% Sales of goods and real estate and others 28.8 10.4 13.9 134% Segment Reve

  28. Slide 28: Real Estate (2)

    Appendix (9) Real Estate (2) ■Breakdown of Real Estate Segment Assets （JPY Bn） FY14.3 FY15.3 FY16.3 Change Rental Property 665.8 566.9 493.4 87% Under Lease 536.9 471.5 406.1 86% Under Development 128.9 95.4 87.3 92% Condo Assets 31.1 16.5 5.9 36% NRL / Specified Bonds 48.8 27.9 5.8 21% Operating Fa

  29. Slide 29: Investment and Operation

    Appendix (10) Investment and Operation （JPY Bn） FY14.3 FY15.3 FY16.3 Change Finance revenues 18.4 15.7 12.6 81% Gains on investment securities and dividends 9.7 9.3 10.3 110% Sales of goods and real estate 120.6 371.4 718.9 194% Services income 86.1 260.4 277.2 106% Segment Revenues 236.9 666.1 1,02

  30. Slide 30: Retail

    Appendix (11) Retail （JPY Bn） FY14.3 FY15.3 FY16.3 Change Finance revenues 50.4 52.5 55.3 105% Life insurance premiums and related investment income 155.8 352.5 190.8 54% Services income and others 5.4 20.9 8.2 39% Segment Revenues 211.6 426.0 254.3 60% Segment Expenses 165.7 342.1 203.3 59% Equity

  31. Slide 31: Overseas Business (1)

    Appendix (12) Overseas Business (1) （JPY Bn） FY14.3 FY15.3 FY16.3 Change Finance revenues 57.3 63.3 75.0 119% Gain on investment securities and dividends 15.8 30.5 16.1 53% Operating leases 76.6 82.1 92.0 112% Services income 228.8 321.5 250.1 78% Segment Revenues 412.2 561.9 526.0 94% Segment Expen

  32. Slide 32: Overseas Business (2)

    Appendix (13) Overseas Business (2) ■Overseas Business Segment Assets Breakdown （JPY Bn） By Region FY14.3 FY15.3 FY16.3 Change Americas 518.1 776.2 787.2 101% Asia / Australia 655.6 591.5 592.3 100% Greater China 196.6 249.2 260.3 104% Middle East / Europe 41.9 43.1 49.3 114% Robeco 375.1 346.3 340.

  33. Slide 33: Usage of Shareholders' Equity

    Appendix (14) Usage of Shareholders’ Equity  Ratio of employed capital* is controlled within the range meeting single A rating requirement  Secure c.20% as a capital buffer for financial soundness and flexibility *ORIX calculation (Risk Capital/Shareholders’ Equity) Employed Capital Ratio Breakdow

  34. Slide 34: Bond Issuances

    Appendix (15) Bond Issuances ■Bonds issued in FY2016.3 Term Issued Amount Issued to Coupon T Spread (year) #184 Apr 30,2015 JPY 35.0 bil 5 Retail Investors 0.337% 25bp 【ORIX /Domestic Bond】 #185 Feb 10,2016 JPY 40.0 bil 5 Retail Investors 0.415% 41bp JPY 75.0 bil （Retail Investors: JPY 75.0 bil ) 【O

  35. Slide 35: Reconciliation Table of Non-GAAP Financial Measurement

    Appendix (16) 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 transac

  36. Slide 36: Reconciliation Table of Non-GAAP Financial Measurement

    Appendix (17) Reconciliation Table of Non-GAAP Financial Measurement （JPY Bn） Key Ratio FY14.3 FY15.3 FY16.3 Total Assets （a） 9,067.0 11,443.6 10,996.9 Deduct: Payables under Securitized Leases, Loan Receivables and 253.8 291.6 276.1 Investment in Securities Adjusted Total Assets （b） 8,813.1 11,152.

  37. Slide 37: Reference Data

    Reference Data Copyright © 2016 ORIX Corporation All rights reserved. 36

  38. Slide 38: Macro Economic Indicators

    Macro Economic Indicators National CPI (Ex Fresh Food) Trends in Machinery Orders (YoY Change) % Change JPY Tn 7.0 3.5 6.0 5.0 3.0 4.0 2.5 3.0 2.0 2.0 1.0 1.5 0.0 1.0 -1.0 0.5 -2.0 -3.0 0.0 12.3 13.3 14.3 15.3 16.3 11.12 12.12 13.12 14.12 15.12 Japan U.S China Private demand excl. volatile orders* M

  39. Slide 39: Japanese Corporate Indices

    Japanese Corporate Indices Corporate Bankruptcies Tankan Corporate Diffusion Index (Quarterly Basis) (Quarterly Basis) JPY Tn Cases 30 3.0 4,000 3,000 20 2.0 2,000 1.0 10 1,000 0.0 0 0 12.3 13.3 14.3 15.3 16.3 12.3 13.3 14.3 15.3 16.3 Liabilities (left) Bankruptcies (right) Large Medium Small Source

  40. Slide 40: Japanese Real Estate Indicators

    Japanese Real Estate Indicators Japan TSE REIT Index Office Rental Rates Yen per 3.3㎡ 20,000 2,000 16,000 1,500 12,000 1,000 8,000 500 12.3 13.3 14.3 15.3 16.3 12.3 13.3 14.3 15.3 16.3 Tokyo Avg. Rent Osaka Avg. Rent Source: Tokyo Stock Exchange Source: Miki Shoji Copyright © 2016 ORIX Corporation A

  41. Slide 41: Domestic Lease Business Indicators

    Domestic Lease Business Indicators Private Equipment Investment New Car Sales JPY Tn 1,000 Units 100 12.0% 7,000 14.0% 千 10.0% 6,000 12.0% 80 5,000 10.0% 8.0% 60 4,000 8.0% 6.0% 40 3,000 6.0% 4.0% 2,000 4.0% 20 2.0% 1,000 2.0% 0 0.0% 0 0.0% 03.3 05.3 07.3 09.3 11.3 13.3 15.3 05.12 07.12 09.12 11.12

  42. Slide 42: Other Domestic Indicators

    Other Domestic Indicators Number of condominium sold in the Domestic Shipping Amount of Solar Cell Tokyo metropolitan area No. of transactions MW 60,000 10,000 50,000 8,000 Others 40,000 Residential 6,000 30,000 4,000 20,000 2,000 10,000 0 0 09.3 10.3 11.3 12.3 13.3 14.3 15.3 16.3 10.3 11.3 12.3 13.

  43. Slide 43: Other Domestic Indicators

    Other Domestic Indicators The number of M&A deals The number of the New Listed Companies OUT-IN 3,000 100 IN-OUT IN-IN 2,500 80 2,000 60 1,500 40 1,000 20 500 0 0 10.12 11.12 12.12 13.12 14.12 15.12 Source: RECOF Corporation Source: Tokyo Stock Exchange Copyright © 2016 ORIX Corporation All rights r

  44. Slide 44: Other Domestic Indicators

    Other Domestic Indicators Premium Income for Individual Insurance Consumer Finance Loan Balance JPY Bn JPY Bn 25,000 15,000 20,000 12,000 15,000 9,000 10,000 6,000 5,000 3,000 0 0 05.3 07.3 09.3 11.3 13.3 15.3 05.3 07.3 09.3 11.3 13.3 15.3 Source: Japan Statistics Bureau Source: Japan Financial Serv

  45. 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,

  46. 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 Website: URL: http://www.orix.co.jp/grp/en/ IR Website: URL: http://www.orix.co.jp/grp/en/ir/ If you would like to be included on our e-mail list for major

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