ORIX CORP Q3 FY2025 earnings call

• Net income for the third quarter was JPY88.8 billion, with nine months cumulative at JPY271.8 billion, up 24% year-over-year, annualized ROE 9%, 70% toward full year FY '25 net income target of JPY390 billion.
• Finance category stable, Insurance investment income offset Credit transition impact. Operations category recovery in asset management, airport ops, Santoku shipping contributed. Investment category had gains in multiple segments.
• Completed JPY50 billion share repurchases, policy to limit treasury stock to 5% of total shares, canceling excess. Full year dividend unchanged.
• Capital gains JPY95.5 billion for nine months, cash from sales approx JPY370 billion Q1-Q3, new transactions approx JPY430 billion. Progress in capital recycling with Greenko divestment and AM Green investment discussed.

The segment performance was as follows: Net income for the third quarter was JPY88.8 billion, with cumulative nine months ending December 2024 at JPY271.8 billion, up 24% year-over-year. Finance category was a stable earnings source; Insurance investment income and other factors offset profit decrease from ORIX Credit's transition to equity method affiliate. Operations category saw recovery in asset management and airport operations, with Santoku shipping contributing. Investment category had gains in domestic PE, real estate, and overseas renewable energy. Detailed segments: Corporate Financial Services and Maintenance Leasing segment income increased JPY5.6 billion to JPY66.2 billion. Real Estate segment profit rose JPY7.4 billion to JPY59.7 billion. PE and Concessions segment profit increased JPY42.8 billion to JPY66.2 billion. Environment and Energy segment profit decreased JPY12.7 billion to JPY17.2 billion. Insurance segment profit increased JPY7.7 billion to JPY61.7 billion. Banking and Credit segment profit decreased JPY5.3 billion to JPY22.1 billion. Aircraft and Ships segment profit increased JPY15.6 billion to JPY44.6 billion. ORIX USA segment profit decreased 22% to JPY27.8 billion. ORIX Europe's segment profit increased JPY7.7 billion to JPY38.1 billion. Asia and Australia segment profit decreased 7% to JPY27.9 billion.

• Net income target for FY '25 March end is JPY390 billion, 70% progress achieved in nine months. Annualized ROE 9% toward targets.
• Plan to continue capital recycling, balancing divestments and acquisitions in Investments category.
• Expectations for Greenko divestment to impact earnings, though conditions like Indian competition law license needed.
• Aim to achieve record high net income for full year, leveraging portfolio categories and capital recycling.

• Uncertainties in U.S. economy affecting ORIX USA, with real estate mortgage profits lower due to high interest rates, though origination volumes recovering.
• Geopolitical risks in Asia, particularly in Greater China and Taiwan.
• Impact of interest rate changes, inflation, and construction costs on Renewable Energy segment.
• Execution risks for divestments like Greenko, dependent on buyer and regulatory conditions.

Q: In various areas, especially ORIX USA and Credit profit weakness, please share vision and reason for Credit profit weakness.

A: Regarding ORIX USA, real estate mortgage profits lower due to high rates but origination volumes recovering. For Credit, business lines like loan fund generation, but P&L slowdown with portfolio monitoring intact.

Q: About midterm plan ROE target and share buyback, current discussion and stance?

A: Midterm plan discussion ongoing, ROE target 11% within sight, focus on capital recycling, asset management, and diversified financing. Share buyback done earlier, EPS growth considered.

Q: Greenko divestment execution risk and impact on dividend?

A: Greenko divestment likely but dependent on conditions, if not executed, impact on full year earnings, but other profits may overshoot initial plan. Dividend payout dependent on execution.

Q: Greenko and Elawan divestment plans, Toshiba profit contribution?

A: Greenko positioned for capital recycling, Elawan development affected by energy price and subsidy changes. Toshiba profit not disclosed due to accounting treatment and business environment changes.

Q: New midterm plan, conservative approach, specific measures, and communication timing?

A: Midterm plan discussion ongoing, focusing on different business time frames, back casting from future goals. Specific measures include granular review of existing investees and projects. Communication timing to be determined, aiming for early sharing of management strategy.