orix corporation · 2012-07-25 · head of the treasury headquarters takao kato corporate senior...
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Copyright © 2012 ORIX Corporation All rights reserved.
ORIX Corporation (TSE: 8591; NYSE: IX)
Consolidated Financial Results
First Quarter Consolidated Financial Results
For the Three Month Period Ended April 1 – June 30, 2012
Haruyuki Urata Deputy President & CFO
Shintaro Agata Corporate Executive Vice President,
Head of the Treasury Headquarters
Takao Kato Corporate Senior Vice President,
Head of the Accounting Headquarters
Copyright © 2012 ORIX Corporation All rights reserved. 1
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 20-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.
These materials contain non-GAAP financial measures, including adjusted long-term and interest-bearing debt, adjusted total assets and adjusted ORIX Corporation shareholders‘ equity, as well as adjusted segment profit and other measures and ratios calculated on the basis thereof. These non-GAAP financial measures should not be considered in isolation or as a substitute for the most directly comparable financial measures included in our consolidated financial statements and presented in accordance with U.S. GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures are included in these materials on pages 27 and 28.
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.
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.
Copyright © 2012 ORIX Corporation All rights reserved. 2
Contents
I. Overview
II. Segment Performance
III. Topics
IV. Summary
Appendix
P. 3
P. 7
P.14
P.16
P.17
Copyright © 2012 ORIX Corporation All rights reserved. 3
I. Overview
(JPY Bn)
Achieved 34.8bn in Net Income, a 1.5 fold year on year increase and 35% of the full year target
Net Income* and ROE
*Net Income refers to Net Income Attributable to ORIX Corporation
Copyright © 2012 ORIX Corporation All rights reserved. 4
I. Overview
(JPY Bn)
Retail, Investment and Operation, and Corporate Financial Services segments significantly increased profits year on year
Trend in Segment Profits
Copyright © 2012 ORIX Corporation All rights reserved. 5
I. Overview
Retail, Maintenance Leasing, and Corporate Financial Services segment assets increased
Trend in Segment Assets (JPY Bn)
Copyright © 2012 ORIX Corporation All rights reserved. 6
I. Overview
Segment Asset ROA (After Tax)
Upward trend in ROA for all segments
Copyright © 2012 ORIX Corporation All rights reserved. 7
II. Segment Performance 1. Corporate Financial Services
1Q Results
New business volume grew 1.6 fold YoY
Assets have bottomed out in the third
quarter of the previous fiscal year
Increased ROA
Topics
Executed large leasing contracts for incinerators, increased lease execution for construction equipment
Focus on solar panel distribution
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II. Segment Performance 2. Maintenance Leasing
Rentec: Started tablet PC and industrial robot rentals
Auto: Opened a truck rental location in Ishinomaki City, Miyagi Prefecture
Increase in base profit due to an increase in
lease revenue and decrease in costs and
SGA
Continued high level of new business since
second half of previous fiscal year and
increase in assets since FY12.3 end
Further increase in ROA
1Q Results Topics
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II. Segment Performance 3. Real Estate
Commenced construction of four large scale logistic centers
Strong revenues from Kyoto and Sumida aquariums
Base profit grew due to increased
operating business revenue
Increased profit despite YoY
increase in impairments
Continued steady asset reduction
1Q Results Topics
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II. Segment Performance 4. Investment and Operation
PE Investment: Invested in KINREI
Energy and Environment: Entered into the mega solar business
Loan servicer recorded large
collection revenue
Robust revenues from existing
investments
Significant increase in ROA
1Q Results Topics
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II. Segment Performance 5. Retail
Enhanced cooperation between ORIX Bank and ORIX Credit on card loan business
Reached 1.5 million life insurance policies in force
Recognized upfront costs for ORIX Bank
card loan
Recorded gains and increased assets
due to consolidation of ORIX Credit
Strong Life insurance premium and life
insurance related investment income
1Q Results Topics
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II. Segment Performance 6. Overseas Business
China: Joint leasing company with a leading auto dealer Pang Da Group began operation
Aircraft Leasing: 27 aircraft joint investment with Varde Partners Inc.
YoY decrease of gains from municipal bond trading in the U.S.
Steady increase of lease assets in Asia
Maintained high level of ROA
1Q Results Topics
Copyright © 2012 ORIX Corporation All rights reserved. 13
By Region
Segment Total
Asia/Australia and Other are increasing, excluding the exchange rate effect
(USD Mil)
II. Segment Performance 6. Overseas Business
Copyright © 2012 ORIX Corporation All rights reserved. 14
III. Topics 1. Solar Panel Related Business
Entry into the mega solar business
(1) Mega solar business
• Expect to invest 100MW/30bn yen in the next 3 years
• Also look into raising nonrecourse loans and structuring fund
(2) Rooftop solar power generation business
• Install in factories and warehouses owned by customers, or ORIX’s
facilities
• Expect 100MW/24bn yen in the next 3 years
Enhancement of Solar Panel Distribution business
• Aimed toward power plants. ORIX will purchase the panels, arrange design
and installation with engineering companies, and arrange finance
• Surge in inquiries from sales locations nationwide
Copyright © 2012 ORIX Corporation All rights reserved.
III. Topics 2. Aircraft Leasing Business
15
Joint investment with the leading U.S. asset manager Varde Partners Inc. Acquire 27 aircraft, provide leasing to leading airlines in China and LCC in the U.S.
Currently own and manage130 aircraft, customer base of 65 airlines
in 30 different countries
Aim for 200 aircraft and 100 airline companies
Ranked by S&P for servicing, asset management earned top ranking of “Strong”
Aircraft Leasing Value Chain
Accounting
& Tax
Marketing
Aircraft
Ownership
IT
Systems
Aircraft
Technical
Service
Lease
Admin
Investment
Banking/
Advisory
Legal &
Contractual
Services
Global Aircraft
Growth of Aircraft Leasing Market
Source: Ascend
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Achieved 34.8bn in net income, 35% of the full year target
IV. Summary
Segment asset ROA increased to 2.3%
and ROE increased to 10.0%
Segment assets are on an increasing trend
Copyright © 2012 ORIX Corporation All rights reserved. 17
Appendix
Copyright © 2012 ORIX Corporation All rights reserved. 18
(JPY Bn)
Appendix(1) Trend in Performance
*1 Net Income Attributable to ORIX Corporation
*2 Performance indicators shown are Non-GAAP financial measures. For a qualitative reconciliation of the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, please see pages 27 and 28.
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Appendix(2) Profit by Segment
* Income from discontinued operations (before applicable tax effect), net income attributable to noncontrolling interests and net income attributable to redeemable noncontrolling interests are included
(JPY Bn)
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Appendix(3) Assets by Segment & Region
(JPY Bn)
Overseas Business Segment Assets by Region
Copyright © 2012 ORIX Corporation All rights reserved. 21
Appendix(4) Funding
(JPY Bn)
Copyright © 2012 ORIX Corporation All rights reserved. 22
Appendix(5) Liquidity
(JPY Bn)
*1 Marketable Short-term Debt is the total of bonds and MTN expected to reach maturity within 1 year and the balance of CP.
*2 Performance indicator is a Non-GAAP financial measure. For a qualitative reconciliation of the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, please see pages 27 and 28.
Copyright © 2012 ORIX Corporation All rights reserved. 23
(JPY Bn)
Appendix(6) Real Estate Portfolio
NOI Yield and Vacancy Rate Trends
Gain on Sales of Real Estate Under Operating Lease Trend
*67.1bn of NRL/specified bonds held by domestic Group companies not included (12/6)
*
Trend in Real Estate Segment Assets by Type
Copyright © 2012 ORIX Corporation All rights reserved. 24
(JPY Bn)
Appendix(7) Real Estate Portfolio
Rental Property Assets by Region (12.6)
Rental Property Assets by Type (12.6)
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Appendix(8) Asset Quality
(JPY Bn)
Trend in Provisions and Provisioning Rate
* Provisions (Average Investment in Direct Financing Leases + Average Investment in Installment Loans)
*The above exclude the effects of adopting the new accounting standards regarding the consolidation of VIEs.
*Of the 227.2bn in loans
individually evaluated for
impairment, 143.5bn is
fully covered by collaterals
such as real estate.
Including 67.3bn in
provisions, 92.8% is fully
covered
Asset Quality
*
Copyright © 2012 ORIX Corporation All rights reserved. 26
Appendix(9) 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 transactions (ABS, CMBS), as well as other measures or ratios calculated based thereon, presented on an adjusted basis, which excludes payables under securitized leases, loan receivables and investment in securities and reverses the cumulative effect on retained earnings of applying the new accounting standards for the consolidation of VIEs, effective April 1, 2010.
(1) Our management believes these non-GAAP financial measures may provide investors with additional meaningful comparisons between our financial condition as of June 30, 2012, as compared to prior periods. Effective April 1, 2010, we adopted ASU 2009-16 and ASU 2009-17, which changed the circumstances under which we are required to consolidate certain VIEs. Our adoption of these new accounting standards caused a significant increase in our consolidated assets and liabilities and a decrease in our retained earnings without affecting the net cash flow and economic effects of our investments in such consolidated VIEs. Accordingly, our management believes that providing financial measures that exclude assets and liabilities attributable to consolidated VIEs as a supplement to financial information calculated in accordance with U.S. GAAP enhances the overall picture of our current financial position and enables investors to evaluate our historical financial and business trends without the large balance sheet fluctuation caused by our adoption of these new accounting standards.
(2) Our management believes that in comparing segment information as of June 30, 2012 as compared to prior periods, the provision of the non-GAAP financial measure of base profit that excludes capital gains, allowance for doubtful receivables and probable loan losses, and impairments may provide investors with additional meaningful insight regarding segment profit trends.
We provide these non-GAAP financial measures as supplemental information to our consolidated financial statements prepared in accordance with U.S. GAAP, and they should not be considered in isolation or as a substitute for the most directly comparable U.S. GAAP measures. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures presented in accordance with U.S. GAAP as reflected in our consolidated financial statements for the periods provided, are included in page 27 and 28.
Copyright © 2012 ORIX Corporation All rights reserved. 27
Appendix(10) Reconciliation Table of Non-GAAP Financial Measurement
(JPY Bn)
Copyright © 2012 ORIX Corporation All rights reserved. 28
Appendix(11) Reconciliation Table of Non-GAAP Financial Measurement
*1 (a) Base Profit = Segment Profit – (b) Capital Gains – (c) Provisions – (d) Impairments
*2 Brokerage commissions and net gains (losses) on investment securities, real estate sales (net of cost), gains (losses) on sales of real estate under
operating leases, gains (losses) on sales of subsidiaries and affiliates and liquidation Losses, net, and equivalent amount of real estate joint-venture equity
method profit for equity in net income (loss) of affiliates.
*3 Impairment losses for write-downs of long-lived assets, write-downs of securities, and equivalent amount of costs of real estate sales and equity in net
income (loss) of affiliates.
(JPY Bn)
Copyright © 2012 ORIX Corporation All rights reserved. 29
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/
Financial Reports: URL: http://www.orix.co.jp/grp/en/ir/library/
Five Year Financial Data: URL: http://www.orix.co.jp/grp/en/ir/financial_highlight/
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please send your request to the address below.
Additional Information
ORIX Corporation Corporate Planning Department
Mita NN Bldg., 4-1-23 Shiba, Minato-ku, Tokyo 108-0014, Japan
Tel: +81-3-5419-5042 Fax: +81-3-5419-5901