ORIX Corporation — FY2022 Form 20-F Summary
Business context and reporting period
ORIX is a Japan-based diversified financial services group spanning leasing, lending, insurance, banking, real estate, asset management, private equity, energy, and aircraft and ship businesses. This is an audited annual report for the fiscal year ended March 31, 2022—not a standalone 2021 Q4 filing. Financial statements are prepared under U.S. GAAP and reported primarily in yen.
Financial performance and position
| Metric | FY2022 / March 31, 2022 | Comparable period | Change |
|---|---|---|---|
| Total revenues | ¥2,520.4 billion | ¥2,292.7 billion | +10% |
| Operating income | ¥302.1 billion | ¥258.8 billion | +17% |
| Income before income taxes | ¥504.9 billion | ¥287.6 billion | +76% |
| Net income attributable to ORIX shareholders | ¥312.1 billion | ¥192.4 billion | +62% |
| Basic earnings per share | ¥259.37 | ¥155.54 | +67% |
| ROE / ROA | 9.9% / 2.24% | 6.4% / 1.44% | Improved |
| Total assets | ¥14,270.7 billion | ¥13,563.1 billion | +5% |
| Shareholders’ equity / equity ratio | ¥3,261.4 billion / 22.9% | ¥3,028.5 billion / 22.3% | Equity +8% |
| Debt-to-equity ratio | 1.5x | 1.6x | Improved |
Operating margin was approximately 12.0%, versus 11.3% in FY2021; net income attributable to ORIX shareholders was approximately 12.4% of revenue, versus 8.4%. The filing does not present a single consolidated “profit margin” measure.
- Cash flow: Operating activities provided ¥1,103.4 billion; investing activities used ¥808.8 billion; financing activities used ¥306.6 billion. Cash, cash equivalents and restricted cash totaled ¥1,091.8 billion at year-end, up ¥12.2 billion.
- Debt and liquidity: Short- and long-term debt totaled ¥4,866.7 billion, excluding deposits of ¥2,276.2 billion. Total short-term debt, long-term debt and deposits were ¥7,142.8 billion. Committed credit facilities were ¥651.4 billion, of which ¥507.2 billion was unused.
- Credit quality: Non-performing net investment in leases and installment loans totaled ¥104.5 billion, down from ¥106.9 billion. Allowance for credit losses was ¥69.5 billion, down from ¥79.0 billion.
- Shareholder returns: FY2022 dividend was ¥85.60 per share, with a 33.0% payout ratio. ORIX repurchased 24.1 million shares for ¥50.0 billion during FY2022.
Material changes versus FY2021
- Revenue grew 10%, while total expenses rose 9% to ¥2,218.3 billion. Interest expense declined 13% to ¥68.2 billion.
- Gains on sales of subsidiaries and affiliates rose to ¥187.8 billion from ¥23.3 billion. The sale of the Yayoi business generated a gain of approximately ¥163.0 billion and was a major driver of the earnings increase.
- Segment profit rose to ¥551.2 billion from ¥332.3 billion. Growth included Corporate Financial Services and Maintenance Leasing, ORIX USA, ORIX Europe, and Asia and Australia. PE Investment and Concession and Aircraft and Ships reported segment losses.
- Write-downs of long-lived assets rose to ¥35.7 billion from ¥3.0 billion, including impairment of the coal-biomass power plants. Gross unrealized losses on available-for-sale debt securities increased to ¥124.6 billion from ¥48.0 billion.
- Installment loans increased 5% to ¥3,862.6 billion; net investment in leases increased 3% to ¥1,058.0 billion; investment in securities increased 7% to ¥2,852.3 billion.
Outlook, commentary and risks
- Management’s medium-term targets are net income attributable to ORIX shareholders of ¥440.0 billion and ROE of 11.7%, while maintaining financial soundness equivalent to an A credit rating. Ratings listed at filing were A- from S&P, A3 from Moody’s, A- from Fitch, AA- from R&I and AA from JCR.
- For FY2023, management forecast an interim dividend of ¥42.80 per share and an annual dividend at the higher of ¥85.60 per share or a 33.0% payout ratio. Planned FY2023 capital expenditures were approximately ¥696.4 billion, chiefly for operating lease and power-generation assets.
- Management said COVID-19 continued to weigh on hotels and recreation, airport concessions, and aircraft leasing. It also cited uncertainty from semiconductor shortages, higher oil prices, interest-rate increases and yen depreciation. ORIX described its Russia and Ukraine exposure as limited, but reported impairment losses relating to Avolon aircraft in Russia.
- Key risks include further COVID-19 effects, credit deterioration, asset-value volatility, interest-rate and currency movements, funding access and cost, geopolitical and climate risks, and regulatory, legal, cyber and operational risks. Management cautioned that the duration and economic effects of COVID-19 and geopolitical developments remain uncertain.
- Unusual items included ¥22.6 billion of impairment losses on goodwill and other intangible assets, including ¥21.1 billion related to an ORIX Europe asset-management contract, and ¥7.9 billion of Avolon aircraft impairment and other losses related to aircraft in Russian territories, stated net of ORIX’s ownership share.
- The auditor issued an unqualified opinion on the financial statements and on the effectiveness of internal control over financial reporting.
Important facts for investors to verify
- How much FY2022 earnings growth depended on the Yayoi sale and other subsidiary-sale gains, and whether underlying recurring earnings support the medium-term targets.
- The assumptions and potential further losses for the impaired coal-biomass plants, the ORIX Europe asset-management contract, and Avolon aircraft affected by the Russia situation.
- Whether the sharp increase in unrealized debt-security losses could affect earnings, capital or liquidity if securities are sold or credit conditions worsen.
- Credit trends, including non-performing loans, troubled debt restructurings, allowance adequacy and borrower exposure in overseas real estate and other concentrated portfolios.
- Funding needs and maturity management, including the planned capital expenditures, short-term funding exposure, committed facilities and contingent guarantees.