ORIX Corporation

It's time to begin. Thank you for joining us despite your busy schedule today for Oryx's earnings call for nine months ended December 31st, 2025. My name is Nakane from Investors Relations and Sustainability Department. I'll be the master of ceremony. Thank you for this opportunity. Today we have our operating officer responsible for IR, Kazuki Yamamoto. I want to provide you with an explanation for about, I hope it will be brought back here in a day, and the whole program is scheduled to be approximately one hour. I want to send the floor to yours.

Thank you for the introduction. Thank you very much for taking the time out of your busy schedule to attend the Oryx Group's earnings presentation. I am Kazuki Yamamoto, responsible for corporate planning, investor relations and sustainability. Let me explain the financial results for the third quarter of the fiscal year ending March 2026. Page 2 of the handout contains the key points we want to convey today. The first point is net income. Net income for the nine-month period was 381.7 billion yen, Up by 117.9 billion yen from the same period last year, this was the highest third quarter cumulative net profit ever. We achieved 89% of our revised two-year forecast of 440 billion yen. announced at the time of first half results call. The second point is pre-tax profits. Pre-tax profits for 567.7 billion yen and an increase of 184.3 billion yen year over year and all three categories of finance, operation and investment saw profit growth compared to the same period last year. Growth was particularly strong in investments, and we still achieved an increase in pre-tax profits year by year, even after excluding the large gain on the sale of green coal shares and valuation gains on the remaining stake. The third point is shareholder returns. Along with first-half results, we also announced the expansion of the share buyback program for ¥100 billion to ¥150 billion. By the end of January, we had completed buybacks equivalent to 128.1 billion yen with a progress rate of 85%. This is the increased program. We will continue to make steady progress on acquiring shares to complete our full share buyback program. Please turn to page 3. I will explain previous progress for each of the three categories. This page shows our chart for each of the three categories, finance, operation, and investments, with nine-month cumulative results for the previous and current fiscal year. First, at the top, the dark blue represents finance. Segment profits increased by 8% year-by-year to 145.5 billion yen, with a progress rate of 81% against the full-year forecast. Oryx Life reported growth in investment income, and we were able to increase finance revenues in the Australia and Asia, excluding Greater China. Next, the light blue bar, second from the top, represents operation. Segment profit increased by 17% to 189.5 billion yen compared to the same period last year, with a progress rate of 79% against the full year forecast. In the third quarter, we recorded a gain on the partial sale of shares held in Canara Roboco, an asset management company in India. At the time of IPO of the company, airport concessions and real estate operations also saw improved performance in the third quarter. Moreover, the auto segment posted strong earnings thanks to a robust used car market. The ship's business also boasted earnings with high asset efficiency, having leveraged synergies with Santoku Shipbuilding, which joined Oryx Group the fiscal year ending March 2024. Finally, the pink bar, sales from the top, represents investment segments. Segment profit in this category increased by 100% compared to the same period last year, reaching 261.4 billion yen, marking a significant increase. Increase in earnings. As outlined earlier, we booked a large gain on the sales of Green Curl in second quarter and sales of OMAT, geothermal power business, which also was a contributor. In real estate, we sold several properties, including hotel universe of Port Vita, as well as office buildings and rental condos. Furthermore, domestic PE investees mostly performed well, resulting in increased profit contributions. As a result, segment profits for the nine-month period increased by 40% year-over-year to a total of 596.4 billion yen. Further, pre-tax profits increased by 48% year-over-year to 567.7 billion yen. The difference of 28.7 billion yen between the total segment profits and pre-tax profits is due to business expenses in the administrative departments and other areas. steady profit growth across the finance operations and investment segment was a key feature of our performance in the third quarter for the fiscal year ending march 2036 while building on achievement to date we aim to drive sustainable growth and further improve capital efficiency in the fourth quarter based on the business plan currently being formulated and the medium term outlook for each segment we will continue to take timely and appropriate actions as needed Accordingly, there is no change to our full-year net income forecast at this time. Now, please turn to page 4. This page explains Oryx's progress in capital recycling. The upper section with a light orange background shows sales, while the lower section with a light blue background indicates new investments. Also, the blue and pink circles in the center box shows the category for each of the businesses sold abroad. For the nine-month period, we recorded 196.6 billion yen in capital gains with cash inflow due to divestments amounting to 790 billion yen and cash upflows from new investments amounting to 700 billion yen in total. Now, new investments are being continuously pursued both domestically and overseas, focusing on operations and investments among the three categories. A key investment in operations is the acquisition of our Heco Global, a world-leading company in asset valuation. Furthermore, we have expanded our investments in aircraft supported by generally strong passenger demand. In investments, we made a PE investment in Ruru Arc, the operator of capsule toy specialty source, during the first quarter. In the third quarter, a TOV for INET, a company listed on the Tokyo Stock Exchange Prime Market, was executed. This initiative is part of Pathways. one of our strategic investment areas, which aims to undertake investment in AI infrastructure businesses and DX-related business fields. Additionally, we invested in AN green convertible bonds and logistics facilities. Although not shown on this page, we announced the formation of a PE fund with the Qatar Investment Authority, QIA, last November, and although this fund specializes in domestic PE investment, but investment in Lulu Arc and iNet were before the fund launch, so we plan to leverage the fund for use in future deals. Gains on asset sales, cash inflows and new investments are all progressing steadily. However, there is no change to our full-year forecast from the revision announced at the second quarter. Now, next page 5 and 6 provide a summary of segment profits and assets. On January 1, 2026, we announced organizational reforms to restructure our 10 segments into three business divisions, the APAC Business Division, Infrastructure Business Division, and Europe and America Business Division, as well as new banking and insurance units. However, for FY26 March end, we continue to manage our business using the existing 10-segment trademark. So we will explain our results using these. For detailed information on the performance of each segment, please refer to the slides from page 10 onwards. First, cumulative segment profit in corporate financial services and maintenance leasing for 9 months period increased by 14 billion yen, up 21% year by year, reaching 80.2 billion yen. The Corporate Financial Services Unit in the second quarter posted a profit on the sales of Oryx Asset Management and Loan Services Corporation and Nisei DC. The business enjoyed increased fee income from various activities including operating lease investments. Together, these resulted in increased profits year by year. The automobile unit steadily expanded earnings by successfully passing through higher maintenance and other cost increases through pricing with customers understanding. They also sustained strong used car sales. This helped the unit achieve its highest ever profit for the third quarter. The Rentek unit achieved growth in inventory-style rentals of ICT equipment on Windows 11 related with placement demand and saw robust sales of used rental equipment resulting in profit growth. Despite OTO and Rentek posting growth in new OTO lease executions, And PC rentals, respectively, segment assets decreased by 10.1 billion yen to 1.87452 yen compared to the previous year end due to the sales of Oryx Asset Management and Loan Services and Corporations. Next, real estate segment profit was 56.9 billion yen for the nine months. The Investment and Operation Unit posted revenue growth of the sales of from the sales of Hotel Universal Port Vita as well as from the operation of Inns and Hotels. However, it experienced a year-over-year decline in segment profits owing to the absence of the large-scale gain from the sales of 100 Circus in FY25 March. Details concerning the outlook for the facilities operations business will be explained later. The die-care unit was increased profits aided by activities such as the sales of rental condos. Segment assets increased by 44.3 billion yen compared to the end of the previous period, reaching 1.2025 trillion yen. The main reason behind this increase was investment in the Osaka Integrated Resort Project, progressing as planned. In addition, assets rose owing to the completion of several logistics facilities by the Investment and Operation Unit, and Daikyo also increased its investment in newly built condos. The PE investment and concession segment achieved profit growth of 27.8 billion yen, or 42% year-over-year, to 94 billion yen. The PE investment unit reported higher profits year by year due to robust performance at current domestic PE investees such as Toshiba and DHC. On a standard and third quarter basis, we did not execute any individual exits from a PE investment. However, equity earnings from our investment in Toshiba made significant contributions. As a result, quarterly profit exceeded both the first quarter of the previous fiscal year, which included gains from the sales of Sasa Air Holdings, and the fourth quarter when the exit of Waco Pallet was realized. Regarding the Toshiba investment, while we recognize its earnings as equity method investment income, there is a three-month lag in reflecting those results in a financial statement. Now the consortium unit continued to perform well as Kansai International Airport saw increased passenger numbers, especially on international flights. We will explain the impact of China later, but please note that the third quarter earnings at Kansai Airport will be reported together with Oryx's fourth quarter results, with a three-month lag. While the impact for FY26 March is likely to be minimal, we anticipate a certain downside for the next fiscal year. Data on passenger numbers and other details for the three Kansai airports up to December are shown on page 7 for your information. PE investments and concession segment assets was up by 127.7 billion yen from the end of the previous period to 1.1506 trillion yen. The main reasons include new investment in Ruru Arc, the successful TLB of INET, making it our subsidiary from this third quarter and increased balances in equity method investments.

Environment energy segment's profit increased by 109.1 billion yen year over year, reaching 122.2 billion yen. The substantial profit increase is mainly due to gains on the sale of clinical energy and radiation gains on the remaining stake, as well as gains on the sale of azithrite and OMAT. We completely divested our stake in OMAT in third quarter. Domestic earnings show that solar power sales have been decreased in the third quarter due to seasonal factors, but electricity retail sales volumes and prices remain strong. Regarding overseas operations, interest income from convertible bonds of AM Green, which were purchased in the second quarter, contributed to positive performance. Additionally, although Air One's F-30 cells are in the recovery trend, we could remain cautious on development and operation projects at this firm. Federal assets decreased by 11.1 billion yen to 1.002 trillion yen compared to the end of the previous term due to capital recycling. Profit of the insurance segment increased by 12.4 billion yen, up 20% year-over-year, reaching 74.1 billion yen. The impact from expansion in investment assets and rotation of protocol securities has boosted revenue. In terms of product sales, along with a single premium wholesale insurance moonshot and income protection insurance keep-up, launched in the first half of FY26 March, respectively, sales of whole life insurance lines and income launched in December was also strong. Segment assets increased 193.7 billion yen to 3.203 trillion yen compared to the end of previous term. Profit of banking and credit segment decreased by 2.2 billion yen over year, reaching 19.9 billion yen, with interest rates rising, while asset management yields have gradually improved. Funding costs for deposits are rising ahead of those. The one reason for the year-by-year decrease is the booking of losses from selling long-term bonds through the third quarter aimed at improving the bond portfolio. We are responding flexibly with priority on maintaining financial soundness and enhancing future profitability. Second assets increased by more than 15.3 billion yen to 3.2599 trillion yen compared to the end of the previous term. New executions of investment real estate loans and lending to strategic areas have grown steadily. Additionally, we explained, in the first quarter, a 30 billion yen dividend was paid out to the parent company, Oryx, in July of last year, helping to optimize bank capitalization. Profit in the aircraft and ship segment increased by 4 billion yen, which is 9% higher year-over-year, reaching 48.6 billion yen. Aircraft leasing saw increased plane sales in the third quarter, resulting in profit growth during the 9-month period. Lease rates continue to improve and the business environment remains favourable. Avaron also advanced aircraft sales and booked profit contributions from the Castle Lake portfolio, which was acquired in January last year, resulting in similar profit growth. Ships saw increased ship sales in the third quarter but experienced a slight profit decrease due to the absence of a sharp rise in charter fees in some contracts in Q2 of 5-25 March. Segment assets increased by 46.5 billion to 1.2785 trillion. Compared to the end of the previous term, aircraft leasing assets increased on investment of new planes, but assets in the ships unit was lower on sales on owned ships, and overall it was flat, excluding forex. Org's UNC segment reached 14 billion yen for the nine-month period showing positive recovery thanks to valuation gains on investments in PE, looking in Q3. However, profits for the nine-month period decreased year-on-year due to the absence of a reversal of the credit costs booked in April 25, March, and the credit loss expenses and impairments booked in the same year. Credit losses and impairments mostly stemmed from real estate lending originated primarily during the post-COVID period of financial easing and the legacy assets before those days. Higher US dollar interest rates and the problem of denigration and uncertain economic outlook stemming from tariffs and other factors also contributed. To date, we have strengthened our investment and lending standards, applied more rigorous screening to new deals and enhanced risk management to existing assets. And through these efforts, we continue to improve and reshape our portfolio. Please refer to Supplementary Information, page 25 and 24, for further details of OCA performance. Segment assets increased 491.6 billion yen to 2.0856 trillion yen compared to the end of the previous term. Excluding the impact of the Hilco global acquisition and exchange rate fluctuations, assets are declining, and we are steadily moving forward with rebuilding our business and portfolio rotation. Profit in OEX Europe segment increased by 9.2 billion yen, which is a 24% rise year-over-year, reaching 47.3 billion yen. In the third quarter, Oryx sold a portion of its holdings in Canara Robico in conjunction with its IBO. Additionally, Robico Group increased net cash inflows and expanded AUM to a record €500.5 billion, boosting management fees and underpinning profits. Segment assets increased by 127.6 billion yen to 796.9 billion yen compared to the end of the previous term due to exchange rate effects. Profit in Asia-Australia segment increased by 11.4 billion yen, which is 41% rise, earlier reaching 39.3 billion yen. Although the increase in profit this quarter was partly driven by one factor, U.S. valuation gains and omissive equities, we continue to restrain investments in Greater China, while in other APAC regions, we expanded earnings primarily through financial income generated by local operations resulting in overall profit growth. Segment assets increased by 125.9 billion yen to 1.8515 trillion yen compared to the end of the previous term. Assets have increased in some regions such as Australia and India mainly due to exchange rate effects. Please see page 29 for graph showing a segment asset breakdown by country and region. where China has seen recent increase driven by exchange rate effects. That concludes explanation by Sigmund. Please turn to page 7. I would like to add some explanation about inbound tourism. Conception centered on Kansai International Airport is a reflective of its consolidated results with a three-month lag through the earnings of Kansai Airports. So for this third quarter, we incorporated Kansai Airports' July through September performance, which contributed to higher profits. Since December, the number of Chinese passengers has declined significantly. approximately 40% year-on-year, just looking at September. And in addition, in late January, major Chinese airlines announced extensions of their deadlines, allowing free cancellations for Japan-bound tickets. As a result, unfortunately, we expect downward pressure on earnings and continue for the time being. However, a number of international passengers and inbound tourists in general Well, you can see the trend after the COVID-19 pandemic and also the impact of mainland China. You can see that on the right-hand side graph. As for real estate operations in Kansai area, there is an impact of a discount, mainly focusing on group choices from China. And therefore, currently it is difficult to increase the unit price. Due to the operations directly operated by Oryx, we have been looking to improve VEPA, focusing on hotels in Kansai region. The share of mainland Chinese customers to total assets in both hotels and inns is small, and Oryx Hotels and Inns tend to specialize in individual Chinese travelers, and inns have remained steady. Meanwhile, some facilities have seen looking slow during the Lunar New Year period, so we are carefully monitoring the situation. Real estate operations like hotels and inns are affected by inflation and rising construction costs, and therefore will enforce sustainable growth while carefully selecting new investments. There's basically no impact on rental cars because driving licenses issued by authorities in mainland China are not valued in Japan. And in aircraft and ship segment, We continue to see steady passenger traffic mainly from Europe and United States and solid supply and demand in aircraft and therefore overall OREC's inbound tourism related businesses appear to be well balanced. Thanks in part to the success of the Expo held last year, global interest in the Kansai region rose significantly, both in terms of the economy and opportunities. In our integrated report 2025, we highlighted a range of value creation initiatives, including the Expo, Kansai International Airport, advance opening of Umei Kita District and the launch of globally branded hotels. We wanted to give a broader audience an effortless way to experience the atmosphere and momentum of this region, and to that end we are planning to introduce a short video on our website. Apologies for taking a moment during this earnings presentation, but we would like to share this video teaser preview for the next 90 seconds or so. I believe Kansai is now entering a period of significant change. Kansai refers to a region in western Japan centered around Osaka, Kyoto, and Kobe. We know that there is great expectation. So during the World Expo, many dignitaries from around the world were able to show the world that Tokyo isn't the only global city in Japan. Osaka is also a global city. We want to be very active in Asia as well, and I hope that people understand that what we're trying to do Thank you very much for viewing the video. Please turn to the presentation material and turn to page 8. This is the financial strategy. Financial breakdown is shown on the left and key indicators on the right. Total assets increased by 1.2594 trillion yen compared to the end of last year. Excluding the FX effects, there was an increase of 800 billion, and the largest factor was the conservation of local global. And then we have a PE investment and also assets increasing in insurance and banking, but for insurance and banking, self-funding is also possible. Long-term debt, short-term debt and deposits increased by 363.4 billion yen mainly due to the growth in deposits in Oryx Bank and the new-found issuance. We will continue to diversify funding sources and increase the ratio of long-term borrowings to maintain stable and competitive funding. Insurance contract liabilities and policy reserves decreased by 234.2 billion yen. This was mainly because of higher discount rate used to measure insurance contract liabilities, resulting in a reduction of liabilities on the balance sheet, and this more than offset an increase of our new single premium policy sales. and the total shareholders' equity was increased by ¥495.2 billion, of which ¥234.2 billion was attributable to the reduction in insurance contract liabilities. And the remaining increase primarily reflects the accumulation of retained earnings. Shareholder's equity ratio is 25.3%. The ratio excluding deposit is still at 1.5 times. On the right-hand side, the graph shows the employed capital ratio, which remained at around 90% due to capital recycling. By maintaining appropriate employed capital ratio, we aim to maintain an international credit rating at the A-level going forward. Please note that the calculation model has been updated from Q3. There are no changes in terms of risk tolerance or risk-taking policy, but the risk ratios are now defined at more precise business and unit levels than before. While young funding costs, including bank deposits, are gradually rising, franchisee funding costs, mostly in U.S. dollars, continue their downward trend. We strive to reduce capital costs by leveraging our competitive A-level credit ratings and diversified funding capabilities. Please turn to page 9. Progress in our share buyback program is as indicated in the exit summary. Their ratio for full year is a 39% of our net income per share. We want to maintain this level. Left bottom, 153 yen or so per share. This is based on the assumption of net income forecast of 440 billion yen. We will give further details at the end of the fiscal year. That concludes my presentation. Thank you very much for your kind attention.