- Net Income: Up 38% year over year to JPY86.7 billion.
- Annualized ROE: 8.7%.
- Finance Category Segment Profits: Down 1% year over year to JPY47.2 billion.
- Operation Category Segment Profits: Up 14% year over year to JPY53.2 billion.
- Investment Category Segment Profits: Up 194% year over year to JPY36.8 billion.
- Total Segment Profits: Up 28% year over year to JPY137.3 billion.
- Inbound Tourism Profits: Up 78% year over year to JPY6.9 billion.
- Capital Gains: JPY35 billion for the quarter.
- Corporate Financial Services and Maintenance Leasing Segment Profits: Down 3% year over year to JPY19.8 billion.
- Real Estate Segment Profits: Up 36% year over year to JPY14 billion.
- PE Investment and Concession Segment Profits: Up 455% year over year to JPY32 billion.
- Environment Energy Segment Losses: JPY500 million, down JPY5.5 billion year over year.
- Insurance Segment Profits: Up 13% year over year to JPY21.9 billion.
- Banking and Credit Segment Profits: Down 23% year over year to JPY6.4 billion.
- Aircraft and Ship Segment Profits: Up 54% year over year to JPY11.8 billion.
- ORIX USA Segment Profits: Down 3% year over year to JPY11.8 billion.
- ORIX Europe Segment Profits: Up 56% year over year to JPY11.2 billion.
- Asia and Australia Segment Profits: Down JPY2 billion to JPY8.9 billion.
- Base Profits: Up 6% year over year to JPY103.8 billion.
- Investment Gains: Up 261% year over year to JPY33.5 billion.
Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Q1 net income increased by 38% year over year to JPY86.7 billion, representing a strong start to the fiscal year.
- Profits in the insurance segment and airport concessions showed significant growth.
- Inbound tourism-related businesses saw a 78% increase in profits, driven by aircraft leasing and airport concessions.
- Capital recycling efforts resulted in JPY35 billion in capital gains for the quarter.
- The company made several key investment decisions likely to contribute to future growth.
Negative Points
- Finance category segment profits were down slightly by 1% year over year.
- Corporate financial services and maintenance leasing segment profits decreased by 3% year over year.
- Environment energy segment reported losses of JPY500 million, down JPY5.5 billion year over year.
- Banking and credit segment profits declined by 23% year over year.
- US real estate business showed higher non-performing loans, indicating potential future risks.
Q & A Highlights
Q: How does market fluctuation affect your earnings, particularly with sensitivity to Forex and potential interest rate cuts by the Fed and ECB?
A: Kazuki Yamamoto, Operating Officer, Corporate Function Unit Responsible for Investor Relations and Sustainability Department: Sensitivity to Forex currently indicates a plus and minus of JPY2 billion. Interest rate cuts, especially in USD and EUR, would be positive for us, benefiting aircraft-related businesses, private equity, and real estate. We see these monetary policy changes as opportunities for earnings growth.
Q: Regarding the Panasonic Connect projector business acquisition, what kind of synergy do you expect?
A: Kazuki Yamamoto: This is a carve-out investment from a large company, leveraging our PE expertise. While it may take time to become profitable due to its size, we expect good future potential for returns. Synergies with existing businesses are not included in the valuation but are seen as potential upsides.
Q: What are the risks and opportunities for your US businesses if interest rate cuts occur?
A: Kazuki Yamamoto: The US credit market shows signs of recovery, potentially expanding spreads for our investments and loan extensions. Interest rate cuts could lead to market recovery and earnings growth, particularly in the second half of next year. However, real estate and PE investments may take longer to recover.
Q: What is your view on non-performing assets and future risks?
A: Kazuki Yamamoto: Total NPL is just over JPY60 billion, higher than the traditional JPY30-40 billion due to US real estate business classifications. We have no major concerns as some items will be recovered. We are enhancing asset management and transparency to deal with potential future losses.
Q: Can you elaborate on your capital gains target and new investments amid market volatility?
A: Kazuki Yamamoto: We expect capital gains to surpass FY24 March-end, based on Q1 results. Market volatility continues, but we are negotiating deals and see potential tailwinds from yen depreciation. We aim to balance domestic and international investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
