ORIX Corporation Q1 FY2026 earnings call

• Net income for Q1 was JPY 107.3 billion, up 24% y-o-y, annualized ROE 10.4%. - Pretax profit up JPY 35.3 billion y-o-y, finance, operation and investments all saw profit increases. - Completed JPY 40.9 billion of JPY 100 billion share buyback program. - Explained segment performances including finance, operation, investment. - Discussed Greenko share transfer, investment in AM Green, acquisition of Hilco Global. - Outlined investment pipeline and inbound/tourism business performance

Net income for Q1 was JPY 107.3 billion, up 24% y-o-y. Pretax profit was JPY 455.5 billion, up JPY 35.3 billion y-o-y. Finance profit was JPY 49 billion, up 5% y-o-y, progress rate 27% vs full year forecast. Operation profit was JPY 55.8 billion, up 5% y-o-y, progress rate 24% vs full year forecast. Investment profit was JPY 60.1 billion, up 61% y-o-y. Segment profit for Q1 increased 20% y-o-y to JPY 164.9 billion. Corporate Financial Services & Maintenance Leasing: segment profit up JPY 3.8 billion to JPY 23.6 billion. Real Estate: segment profit up JPY 21.9 billion to JPY 35.9 billion. PE Investment & Concession: segment profit down JPY 8 billion to JPY 24 billion. Environment and Energy: segment profit up JPY 18.4 billion to JPY 17.9 billion. Insurance: segment profit up JPY 2.1 billion to JPY 24 billion. Banking and Credit: segment profit up JPY 3.5 billion to JPY 9.9 billion. Aircraft and Ships: segment profit down JPY 1.9 billion to JPY 9.9 billion. ORIX USA: segment profit down JPY 11.2 billion to JPY 600 million. ORIX Europe: segment profit down JPY 1.2 billion to JPY 9.9 billion. Asia, Australia: segment profit up JPY 100 million to JPY 9 billion

• Currently undertaking thorough review of full year net income target. - Expect earnings to be more skewed to H2. - Share buyback program to continue, aim to flexibly implement shareholder return policy based on full year outlook and new investments. - Full year earnings forecast under review

• Macroeconomic uncertainty requires careful review of planned H2 exits and second half performance. - Tariff impact on US-related businesses, including potential impairment of investments. - Unrealized losses in bond portfolio of ORIX Life

Q: So we now would like to get started. Thank you for joining this telephone conference of ORIX Corporation for first quarter financial results for the 3-month period ended June 30, 2025. I am Nakane from IR. We have today as an attendee Kazuki Yamamoto, Operating Officer in charge of Investor Relations. Yamamoto-san will explain, and this will be followed by Q&A. We plan to have a 1-hour session. So over to you, Yamamoto-san.

A: Thank you very much for taking the time to attend the ORIX Group's earnings call today. I'm Operating Officer in charge of Corporate Planning and IR. I am Kazuki Yamamoto. Let me quickly explain the financial results for the first quarter of fiscal year ending March 2026...

Q: This is Sato-san from JPMorgan Securities, what are your views as to the risk arising from those US-related businesses?

A: Thank you for your question. First of all, ORIX US...

Q: I'm from Nikko. This is Page 8, capital recycling and capital profit and loss outlook. I would like to ask a question about that.

A: So as I mentioned on the right-hand side on Page 8, against the full year forecast. So basically, this is the same as we have announced our budget. So currently, it's under review...

Q: This is Watanabe from Daiwa Securities. Regarding capital recycling, I would like to ask you regarding Acentic-TOB period did not extend and Panasonic projector business was gained in a short period of time. What's the investment discipline? Were there any changes in your approach? And also JPY 30 billion dividend you will be carrying out. So why at this timing are you going to carry out the dividend payout?

A: Well, thank you very much for your question. Regarding Panasonic Connect projector business...

Q: This is Sakamaki from Mizuho Securities. So I have one question. In terms of the shareholder return -- so in terms of the flexibility of share buybacks in the year's plan, you have been talking about that you have been good in your profit process in terms of the sales of Greenko, the -- in terms of the capital you have more room. So what type of internal discussions have been conducted in terms of the shareholder return policy?

A: Thank you very much for your question. So in this Board of Directors has conducted today in the Q1 financial results based on that results, in terms of the discussions has been conducted...

Q: About the return to shareholders, I have a question. First of all, in the first half dividend, how are you going to decide, 39% is the annual, but the profit seems to be skewing towards first half. So what are you're thinking about? And also the additional buyback, and you talked about two major deals as well, but on 70% have completed the sale or it was agreed to. So maybe you will think about what to do with Avalon. Maybe you were thinking about it from about 2 years ago, and this discussion may progress or maybe you will look for a good third-party and whether you will be able to demonstrate your leadership, but the investment size will be quite significant. So taking all this into consideration and also thinking about the future, perhaps you will have to think about the buyback. So the next round of big investment, there may be several options. So I was wondering if this will turn out to be one of them.

A: So about the interim dividend to start with, know very well last year against the first half result, payout ratio was 39%, and that was our return...

Q: So this is Sasaki from Nomura Securities. So I want to ask about the base profit. So I think it's the latter half of the presentation material, the first quarter base profit increased. Where was it coming? As much as possible, can you talk about that, if possible, so from the second quarter onwards, so more than JPY 120 billion, is it sustainable? Or is it going to further increase? Can you please talk about that?

A: So that will be Page 42, I think you're looking at Page 42. As I said at the beginning of the presentation, in terms of talking about the segment profit, in terms of the level of base profit...

Q: In Yamamoto-san, may I ask? So maybe I didn't understand what you have explained. So let me ask again. For this fiscal year's guidance, you said that it's under review. What is the meaning of under review? So simply thinking, so last year, you were not able to sell Greenko, you are not able able to achieve your targets. And then this year, it has been decided. So it maybe go up. So that's kind of a simple thinking that I have. So have used the word under review. Is it that implication that the outlook has become negative? Or it's just technically literally, you're just thinking, so it's under review. So can you please help me understand your thoughts.

A: I think what you said lately is what I was thinking. So when we disclose our buses in terms of the gains come from the sales of Greenko, so in terms of the buyer was reliant on the market conditions, it was a bit difficult to receive, but we have to compile about it...

Q: This is Otsuka from SBI. Can you hear me? Towards the back of the presentation on Page 46, Asset Management disclosure is given JPY 81 trillion at the end of June. And it doesn't say here, but in the previous document, March 2025 towards the left, AM was JPY 74 trillion. I believe it was the number. So simply within 3 months, plus JPY 7 trillion, that's disclosure. So I would like to know the background of this increase. So third-party asset management, I think you've talked about enhancing those areas. So I am now interested.

A: Takahashi-san mentioned this as well. So in mid- to long-term strategy, we would like to grow AUM through asset management that is the direction within mid- to long-term strategy...

Q: So the time has come to end this meeting, we would like to end the Q&A session. So Yamamoto will say some last words.

A: So thank you very much. In the first quarter, I think physically, we have seen come in terms of Greenko from that on last fiscal year, I think people were concerned about the situation, but we have been able to close the deal, and I think that was quite a favorable situation...