ORIX Corporation (IX) Q4 2023 Earnings Call Transcript

For the period ending March 31, 2023

May 10, 2023 3:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good evening, ladies and gentlemen. Thank you for joining this telephone conference by ORIX Corporation for Consolidated Financial Results for the Fiscal Year Ended March 31, 2023. From IR sustainability, my name is Nakane. I'm the Master of Ceremony today. Thank you for this opportunity.

We have two attendees today. Makoto Inoue, member of the Board of Directors, President, Executive Officer and CEO; and Hitomaro Yano, Executive Officer responsible for Accounting and IR. [Operator Instructions] Mr. Yano will take the first half and second half will be taken by Mr. Inoue, followed by Q&A.

We expect the duration of the meeting to be approximately one hour. Mr. Yano?

Hitomaro Yano

Good evening. This is Hitomaro Yano, Executive Officer responsible for Accounting and Treasury and Investor Relations at ORIX. Thank you so much for joining us today despite your busy schedule. Let me start by giving an overview of FY '23 March end results.

Please turn to Page 2. Net income fell 12% year-over-year to ¥273.1 billion. For FY '23 March, it was disappointing to see earnings decline, but we substantially exceeded our forecast of ¥250 billion announced on November 7. ROE was at 8.3%. The right-hand chart shows quarterly trend in net income. Fourth quarter net income was ¥61.7 billion, investment gains and asset management fees from ORIX Europe fell as compared to the third quarter. As we booked some impairments in the fourth quarter, growth was less evident than in the first quarter and the second quarter, but progress in reopening has helped a solid trend for the quarter.

Please turn to the next page. This is a breakdown of segment profit. Segment profit totaled ¥381.3 billion, down 28% year-over-year. Please look at the left-hand chart, which shows trends in segment profits. The light blue bar indicates investment gains, while the dark blue bar shows base profit. Base profits fell by 13% year-over-year to ¥297.8 billion, while performance among segments varied, but overall, we were able to secure stable base profits despite our big operating comment. I will go into further details later. The light blue investment gains were down 55% year-over-year to ¥83.5 billion, owing to the absence of last year's substantial gain on the sales of Yayoi.

ORIX typically books investment gains of around ¥100 billion each year. Even in a tough environment, we were able to continue our effort of capital recycling and maintain a level of investment gains mostly on par with that of a normal year through the partial sales of our Ormat stake and logistics centers.