ORIX Corporation (IX) Earnings

Management highlights

### Overall Financial Results - Net income for Q1 FY2027 was 280.8 billion yen, up 173.5 billion yen YoY, a record high quarterly profit. This represents 53% progress against the full-year net income forecast of 530 billion yen. Gains from Kioxia share sales and valuation at investee Toshiba contributed significantly to the result. ### Capital Recycling and M&A - Completed planned exits from domestic PE investee Sugiko, multiple PE investments at Oryx USA including Peak Utility and Network Connex. Completed full share transfer of Oryx Bank to Diver Securities Group on August 3, 2026. - Signed a share transfer agreement for 100% acquisition of Airfin, a major aircraft parts-out company, to expand the group's aircraft value chain from new aircraft leasing to end-of-life parts utilization. - Q1 capital recycling generated 115.7 billion yen in capital gains and ~300 billion yen in cash inflows from divestments. Cash outflows for new investments totaled ~80 billion yen (including the Airfin acquisition), resulting in higher inflows than outflows. Management continues to optimize the portfolio with a balanced approach to investments and divestments. ### Dividend Policy Update - Revised dividend policy to use adjusted profits (net income excluding Kioxia sale and valuation gains) as the source for dividend payments. The existing payout framework remains unchanged: the annual dividend will be the higher of 39% of adjusted profits or the prior year's dividend of 166.10 yen per share. - Based on the first half adjusted profit forecast of 300 billion yen, the interim dividend per share (DPS) is set at 107.27 yen. The full year dividend forecast is maintained at 187.36 yen per share. ### Shareholder Returns - As of the end of July 2026, 78.4 billion yen of the 250 billion yen full-year share buyback program authorized in May 2026 has been completed, representing 31% progress. The full-year total payout ratio (including dividends and share buybacks) remains 85.9% as previously disclosed.

Guidance

- The full-year FY2027 net income forecast remains unchanged at 530 billion yen, as Kioxia share price volatility makes full-year gain/loss projections highly uncertain. - First half FY2027 net income is forecast at 840 billion yen, consisting of 540 billion yen in non-cash Kioxia sale and valuation gains (based on Kioxia's 89,680 yen end-of-June share price) and 300 billion yen in adjusted profits. - Management expects adjusted profit to grow steadily in the second half of FY2027, supported by improved core earnings power. - The full-year capital recycling and investment outlook announced in May 2026 remains unchanged, with 800 billion yen in planned new investments for the full fiscal year.

Segment performance

1. Japan and APAC: Pre-tax segment profit was 289.8 billion yen, an increase of 237.6 billion yen year-over-year (YoY). Excluding 179.8 billion yen in Kioxia sale and valuation gains, core segment profit was 110 billion yen, up 57.8 billion yen YoY. IPEC in Japan accounts for 33% of total segment assets, with slight overall asset growth offset by a small balance decline in Greater China. Revenue contribution as a share of total pre-tax segment profit is ~58%. 2. Infrastructure: Pre-tax segment profit was 43.3 billion yen, a decrease of 25.1 billion yen YoY. Excluding large one-time sales gains recorded in the prior year Q1, profit increased YoY. Avalon and SHIB achieved growth from favorable market conditions, but renewable energy faced output restrictions that reduced profits, and concession assets including Kansai Airport saw year-over-year profit declines. Segment assets ended slightly lower YoY, as aircraft sales and exit from logistics/real estate offset growth from Avalon and continued ship investments. Revenue contribution as a share of total pre-tax segment profit is ~8.6%. 3. USA and Europe: Pre-tax segment profit was 63 billion yen, an increase of 52.4 billion yen YoY. Oryx USA recorded fair value gains from private equity (PE) investments, and Robeco (overseen by Oryx Europe) expanded assets under management (AUM) to a record high and grew fee income. Segment assets increased driven by growth in NXT Capital asset-based lending. Revenue contribution as a share of total pre-tax segment profit is ~12.6%. 4. Insurance: Pre-tax segment profit (mostly from Oryx Life) was 28 billion yen, an increase of 3.9 billion yen YoY. Growth was driven by strong earnings from newly launched yen-denominated whole life insurance products and new high-value contracts for corporate and high net worth clients, alongside strong investment returns. Assets increased slightly on the back of expanded premium income. Revenue contribution as a share of total pre-tax segment profit is ~5.6%.

Risks & headwinds

- Kioxia share price is highly volatile: every 10,000 yen change in Kioxia's share price changes Oryx's after-tax Kioxia sale and valuation gains by 57 billion yen. As of August 5, 2026, Kioxia's share price fell to 54,300 yen from 89,680 yen at the end of June. Depending on the share price at the end of September 2026, Oryx may record Kioxia sale and valuation losses in the third quarter. - Renewable energy output regulations in the Infrastructure segment have negatively impacted current profits, leading to year-over-year declines. - High asset valuations in some current market sectors require selective, disciplined investment decisions to avoid overpaying for new assets. - Some portions of the Oryx USA business portfolio are still returning to profitability after acquisition-related expenses in prior periods, with full performance improvements not yet reflected in results.

Analyst Q&A

• Q: Will the full-year 530 billion yen net income target be met, and will Kioxia gains/losses be adjusted for ROE calculations like they are for dividends?

  A: Management expects that near-term shortfalls relative to the 530 billion yen target can be offset by expected pipeline gains in the second half, but these gains are not yet mature enough to incorporate into an updated official forecast. For ROE, internal discussions are ongoing regarding whether to adjust just the denominator or both the numerator and denominator for Kioxia gains/losses, and the company will update investors once a final decision is reached.

• Q: The Q2 adjusted profit outlook implies low core profit after including the Oryx Bank sale gain — is this due to unstated downside risks or intentional conservatism?

  A: Management confirms the Q2 forecast includes the post-tax Oryx Bank gain, matching analyst calculations. The lower implied core Q2 profit reflects both intentional conservatism in forecasting and planned one-off factors, and management considers overall first half core earnings progress to be solid, with steady revenue recovery on track.

• Q: What capital and profit impacts are expected from the Airfin acquisition, and what synergies are targeted?

  A: The purchase price premium cannot be disclosed publicly, but profit contribution is expected to align with the pre-acquisition profit Airfin disclosed publicly on the UK market. Intangible asset depreciation will create a small moderate near-term drag on net profit. The primary synergy is completing the group's full aircraft value chain, from leasing to end-of-life parts reuse. Additional synergies come from complementary, non-overlapping customer bases that will allow cross-referrals and expanded revenue across the combined business.

• Q: Robeco (Oryx Europe) AUM grew very strongly quarter-over-quarter in Q1 — was this driven by temporary one-off factors, or can this level of growth be sustained?

  A: Some of the Q1 growth came from one-off market price appreciation, so some deceleration is expected in coming quarters. However, a large portion of the growth comes from sustained net new client inflows driven by Robeco's strengthened marketing efforts, which have won new long-term mandates. Management expects growth to stabilize at a healthy level rather than decline sharply, as sustained new inflows will support ongoing fee income growth.

• Q: Why is YTD new investment activity slower than the full-year 800 billion yen plan, and will the full-year target be met?

  A: The slower start is intentional and not a sign of a weak investment pipeline. High current valuations in some sectors mean management is being selective to maintain investment discipline and buy assets at favorable prices. Additionally, large exits completed early in the year are being reinvested gradually, and many large projects (including Osaka IR related investments) are scheduled to close in the second half of the fiscal year, which is within management's original plan. The full-year target remains on track, with a larger share of full-year investments expected to be in Japan this year.