ORIX Corporation (NYSE:IX) Q2 2024 Earnings Call Transcript
ORIX Corporation (NYSE:IX) Q2 2024 Earnings Call Transcript November 2, 2023
Nakane: Now it's time to start the ORIX Corporation's Financial Results Briefing for the Six-Month Period Ended September 30, 2023. Thank you very much for joining us today. I'd like to act as a moderator. I am Nakane from IR Sustainability Promotion Division. Today, we have Mr. Makoto Inoue, the President and CEO; as well as Mr. Hitomaro Yano, in charge of Accounting and Treasury and Investor Relations. There are some housekeeping announcements. In order to prevent any interference if you have any mobile phones or telecommunication devices nearby, please make sure to turn them off or move away from those devices. First, I will call upon Mr. Yano and then Mr. Inoue to make presentations and then take questions. We plan to spend about one hour. Now Mr. Yano.
Hitomaro Yano: Thank you for the introduction. This is Yano speaking in charge of Accounting and Treasury and Investor Relations. Thank you for taking time out of a very busy schedule to participate into this briefing. I'll start by explaining about our fiscal 2024 March results. Please turn to Page 2. For first half of fiscal 2024 March, ORIX reported net income of JPY128.1 billion, up 4.7% year-on-year. This translated into annualized ROE of 7.0%. Please turn to the next page. This is the breakdown of segment profits. First half segment profits were up 11% year-on-year. It was JPY191 billion. This slide shows past trends of segment profits on a full year quarterly and half year basis from left to right. Base profit are dark blue and the investment gains are in light blue.
A financial graph with team of finance professionals analyzing data and trends.
At the far right of the trends for the half year basis, base profits were up 16% year-on-year to JPY167.4 billion. This was primarily due to a recovery in the real estate and the concession business earnings, thanks to higher inbound tourism and the higher profits of the insurance segment as a result of higher investment income. Meanwhile, investment gains in light blue were down 14% year-on-year to JPY23.6 billion. These were primarily due to investment gains on sale of multiple real estate properties booked in the first half. Our CEO will discuss this later on. We plan to aggressively move forward with sales in the second half of this fiscal year. Please turn to Pages 4 and 5 next. This gives a breakdown of segment profits and segment assets.
This should give you a good overview of segment trends as a whole. Detailed information about each segment can be found from Page 16 and beyond. Please review them in your own time. And I will just give you a brief overview using Page 4 and 5. First is corporate financial services and maintenance leasing, Segment profits rose 9% to JPY40.3 billion. Corporate Financial Services, various fee businesses are performing well, and profits were up in the first half as M&A brokerage contributed to profits. In the Auto business, used car prices remained high and Rental car demand is strong continuously. And rental profits were lower year-on-year, owing to the costs associated with the launching of new technology center, but this unit has posted steady profits.
Moving on to real estate. Segment profit was up 42% to JPY26.9 billion. In the investment and operations, profits were up year-on-year, thanks to improving earnings in the facility operations business, hotels and inns on a recovery in inbound tourism demand and office and real condo sales were also booked. In the DAIKYO units, profits were up sharply year-on-year on strong condo sales. In real estate assets, real estate assets were up by JPY69.4 billion versus the end of last year as a careful selection of our new assets continued alongside proactive sales. Next is PE and concession. Segment profits were up 141% year-on-year to JPY9.7 billion. In the PE business – investment units, segment profits were up year-on-year as profit contributions from DHC and HEXEL Works were – which were acquired last year offset lower profits from other investments and impact of investees sales last year.
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