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    IX
    Earnings call· Sep 2025(Q2 FY26)

    ORIX CORP IX

    Nov 12, 2025 Source

    Executive summary

    ORIX Q2 FY26 — Strong H1 Performance Drives Upgraded Outlook and Increased Shareholder Returns

    ORIX delivered a strong second quarter, with record first-half net profit driven by robust performance across all segments and successful capital recycling. The company raised its full-year earnings forecast and increased shareholder returns through an expanded share buyback and higher dividend. Strategic initiatives, including a new PE fund with QIA and the acquisition of Hilco Global, aim to further expand asset management and asset-light businesses, despite some headwinds in the US real estate and banking sectors.

    Highlights

    5

    • Net profit for H1 was JPY 271.1 billion, a record high, up 48% YoY (JPY 88.2 billion increase).

    • Full-year net profit forecast raised from JPY 380 billion to JPY 440 billion.

    • Share buyback program expanded from JPY 100 billion to JPY 150 billion.

    • Total Group AUM reached JPY 88 trillion as of end of September 2025, moving closer to JPY 100 trillion target.

    • All three categories (finance, operation, investment) achieved profit growth YoY, with investment profit up sharply by 117% to JPY 194.9 billion.

    Concerns

    4

    • Osaka IR project costs increased from JPY 1.27 trillion to JPY 1.51 trillion due to inflation.

    • ORIX USA segment reported a loss of JPY 1.8 billion, a JPY 18.1 billion decrease YoY, due to credit costs and impairment from real estate financing and legacy assets.

    • Banking and Credit segment profit decreased by JPY 600 million or 5% YoY due to increasing deposit procurement costs and losses from bond sales.

    • Aircraft and Ships segment profit decreased by JPY 10.1 billion or 31% YoY due to the absence of higher charter fees from certain contracts.

    Guidance & targets

    13
    CategoryTargetConfidence
    Net profit forecast
    JPY 440 billion
    high materiality
    High
    Dividend per share forecast
    JPY 153.67
    high materiality
    High
    Share buyback program
    JPY 150 billion
    high materiality
    High
    Full year ROE forecast
    10.3%
    high materiality
    High
    Pretax profit forecast
    JPY 640 billion
    high materiality
    High
    Full year EPS forecast
    JPY 394
    medium materiality
    High
    Total shareholder return
    JPY 320.7 billion
    high materiality
    High
    Total payout ratio
    73%
    high materiality
    High
    AUM target
    JPY 100 trillion
    high materiality
    High
    ROE target
    11%
    high materiality
    High
    Long-term ROE target
    15%
    high materiality
    High
    Long-term Net profit target
    JPY 1 trillion
    high materiality
    High
    Capital recycling (realization and new investments)
    JPY 600 billion to JPY 800 billion
    medium materiality
    High

    Segment performance

    13
    SegmentRevenueYoYQoQMargin
    Finance
    Strong gross investment income in Insurance, steady financial income from leases and loans in Asia/Australia. Contributed by sales of ORIX Asset Management and Loan Services and Nissay Lease.
    Progress rate vs full year target: 55%ROE: 8.5% (vs 8.3% previous period)Allocated capital: JPY 1.8 trillion
    		—8%—JPY 99.6 billion
    Operation
    Strong performance from inbound tourism (Kansai Airports, hotels/inns), robust used car market, and demand for Windows 11 replacement PCs. Profit also boosted by sale of Zeeklite.
    Progress rate vs full year target: 48%ROE: 14% (vs 13.5% previous period)Allocated capital: JPY 1.3 trillion
    		—9%—JPY 114.9 billion
    Investment
    Sharp increase due to sales of Hotel Universal Port VITA (Q1), Greenko (Q2), and shares of Ormat. Strong performance from domestic PE investments like Toshiba.
    ROE: 16.6% (vs 7.4% previous period)Allocated capital: JPY 1.6 trillion
    		—117%—JPY 194.9 billion
    Corporate Financial Services and Maintenance Leasing
    Significant growth from sales of ORIX Asset Management and Loan Services Corporation and Nissay Lease. Positive growth in various fee revenues. Auto business saw record high profit from robust used car sales. Rentec profit grew on higher ICT equipment rentals.
    Total segment assets: JPY 1,855.3 billion (down JPY 29.2 billion vs previous year)
    		—29%—JPY 58.6 billion
    Real Estate
    Profits increased from hotel/inn operations and sale of Universal Port VITA, but overall down YoY due to previous year's gain from Hundred Circus sale. Daikyo units saw increased profits from rental apartment sales.
    Total segment assets: flat compared to previous fiscal year endFirst equity commitment type real estate value-add fund increased from JPY 100 billion to JPY 120 billion
    		—-3%—JPY 49.1 billion
    PE Investment and Concession
    Steady performance from investees like Toshiba and DHC. Concession unit saw significant increase in profits as Kansai Airports performed well. Assets increased due to new investment in LULUARQ and increased equity method contribution.
    Total segment assets: JPY 1,548 billion (up JPY 31.9 billion vs FY25 end)
    		—21%—JPY 56.7 billion
    Environment and Energy
    Profit bolstered by sales of Greenko Energy and Ormat shares. Domestic electricity retail business enjoyed higher sales volume and unit price. Assets decreased due to capital recycling. Underlying performance (excluding major gains) is mixed, with some units near breakeven or small deficit.
    Total segment assets: JPY 977.4 billion (down JPY 38.8 billion from previous year-end)Ormat equity method contribution: JPY 83 billion
    		———JPY 119.7 billion
    Insurance
    Asset income rose sharply on growth in investment assets. Single premium wholesale life insurance (Moonshot) and revamped income protection insurance (Keep Up) selling well.
    Total segment assets: JPY 3,140.6 billion (up JPY 131.4 billion vs FY25 end)
    		—24%—JPY 50.9 billion
    Banking and Credit
    Profit decreased due to increasing deposit procurement costs and losses from bond sales to improve portfolio quality. Investment real estate loans and merchant banking business saw increased new executions. ORIX Bank paid JPY 30 billion dividend to parent.
    Total segment assets: JPY 3,253.6 billion (up JPY 109 billion vs FY25 end)
    		—-5%—JPY 12.5 billion
    Aircraft and Ships
    Aircraft leasing profit in line with previous year, with high lease rates and increased owned aircraft. Avolon profit rose. Ships unit profit lower due to absence of higher charter fees. Assets increased due to aircraft purchases.
    Total segment assets: JPY 1,256.1 billion (up JPY 24.1 billion vs FY25 end)
    		—-31%—JPY 22 billion
    ORIX USA
    Substantial profit decline due to absence of provision reversals, decrease in capital gains, and booking of credit cost and impairment from real estate financing and legacy assets. Conservative outlook for full fiscal year.
    Total segment assets (excluding Hilco Global): shrunk from JPY 12.2 billion (Mar '23) to JPY 11.3 billion (Sep '25), a 7.4% decline
    		———JPY -1.8 billion
    ORIX Europe
    Net fund inflows grew due to favorable global capital markets, leading to higher AUM and profits.
    AUM: EUR 425 billion (record high)Total segment assets: flat year-on-year (excluding currency impacts)
    		—6%—JPY 22.1 billion
    Asia and Australia
    Profit contributions from investees decreased in Greater China, where ORIX maintained a constrained investment stance. Financial income increased in Singapore, India, and Australia. Assets increased due to FX impact, with decrease in Greater China and increase in Australia and India.
    Total segment assets: JPY 1,741.1 billion (up JPY 15.5 billion vs FY25 end)
    		—3%—JPY 19.7 billion

    Operational metrics

    25
    Net income
    JPY 271.1 billionup JPY 88.2 billion (48% YoY)
    H1 FY26

    Record high for the first half year.

    Annualized ROE
    12.7%
    H1 FY26

    Annualized figure for the first half.

    ROE (excluding Greenko gain)
    ~10%exceeding previous full fiscal year (8.8%)
    H1 FY26

    Healthy ROE even after excluding a large one-off gain.

    Total payout ratio
    73%expected to rise from 65%
    FY26

    Expected for the full fiscal year.

    Pretax profit growth
    52%YoY
    H1 FY26

    Pretax profit increased by 52% YoY, alongside segment profit (42%) and net income (48%).

    Total Group AUM
    JPY 88 trillion
    end of Sep 2025

    One step closer to the medium-term target of JPY 100 trillion.

    Shareholders' equity
    JPY 4.4 trillionvs JPY 4.1 trillion end of previous year
    H1 FY26

    Consolidated balance sheet figure.

    Total allocated capital for 3 categories
    JPY 4.7 trillion
    H1 FY26

    Management accounting figure, slightly different from consolidated shareholders' equity.

    Total asset ROA
    3.15%improved by 1.03% from end of previous period
    H1 FY26

    Improved with the start of portfolio optimization.

    Capital gains
    JPY 157.1 billion
    H1 FY26

    Recorded in the first half.

    Cash inflows from sales
    JPY 500 billion
    H1 FY26

    Major asset sales contributed to cash inflows.

    Greenko Energy sale cash in
    JPY 178.9 billion
    H1 FY26

    Cash inflow from the sale of Greenko Energy.

    Greenko Energy sale capital gain
    JPY 95 billion
    H1 FY26

    Capital gain from the sale of Greenko Energy.

    Hotel Universal Port VITA sale cash in
    JPY 34 billion
    H1 FY26

    Cash inflow from the sale of Hotel Universal Port VITA.

    Hotel Universal Port VITA sale capital gain
    JPY 21.9 billion
    H1 FY26

    Capital gain from the sale of Hotel Universal Port VITA.

    Cash outflows from new investments
    JPY 470 billion
    H1 FY26

    New investments included Hilco Global, AM Green, LULUARQ, aircraft, logistics, and Osaka IR.

    Hilco Global acquisition cost
    JPY 776 million
    H1 FY26

    Investment in Hilco Global.

    Total assets increase
    JPY 738 billioncompared to end of FY25
    H1 FY26

    Half of the increase was due to US-related FX effects, remainder from Insurance segment and ORIX Bank.

    Short-term and long-term debt deposit increase
    JPY 416.9 billion
    H1 FY26

    Mainly due to higher deposits at ORIX Bank and corporate bond issuance.

    Insurance contract liabilities and policyholder reserves decrease
    JPY 223.2 billion
    H1 FY26

    Mainly due to lower liabilities from higher discount rate, offset by increase in single premium insurance policyholder accounts.

    Shareholder equity increase
    JPY 351.9 billion
    H1 FY26

    Total increase in shareholder equity.

    Debt-to-equity ratio
    1.5xsteady
    H1 FY26

    Maintained at a steady level.

    Capital utilization rate
    90% range
    H1 FY26

    Maintained at an appropriate level due to capital recycling.

    ORIX Bank dividend to parent
    JPY 30 billion
    July

    Paid to ORIX Group to optimize capital size.

    Environment and Energy segment underlying profit
    small deficit or breakeven
    H1 FY26

    Management's assessment of the segment's performance excluding major one-off gains like Greenko and Ormat. Analyst calculated JPY 8.2 billion Q2 loss, which management confirmed as correct for Q2 but overall closer to breakeven.

    Industry KPIs

    1
    MetricValueDetails
    Capital returnsJPY 150 billion (buyback), JPY 153.67 (DPS)JPY

    Deals & partnerships

    11
    Qatar Investment Authority (QIA)Establishment of a PE fund to invest in Japanese companiesUSD 2.5 billion (total fund scale), JPY 370 billion (ORIX's 60% commitment, unlevered base)

    ORIX will contribute 60% and QIA 40%. Main investment targets are business section type deals, privatization of listed companies, and carve-outs.

    Hilco GlobalAcquisition of a US company specializing in asset evaluation and disposal, and asset-backed lending (ABL).

    Hilco provides services globally such as evaluation and disposal of mobile assets (inventory, equipment), intangible assets (IP, trademarks), and ABL.

    Greenko EnergySale of all or partial shares.

    Part of portfolio optimization efforts.

    ORIX CreditSale of all or partial shares.

    Part of portfolio optimization efforts.

    OrmatSale of all or partial shares in NYSE-listed renewable energy company.

    Part of portfolio optimization efforts.

    Nissay LeasingSale of all or partial shares.

    Part of portfolio optimization efforts.

    Canara RobecoSale of all or partial shares.

    Part of portfolio optimization efforts.

    ORIX Asset Management and Loan Services CorporationSale of the company.

    Part of portfolio optimization efforts.

    ZeekliteSale of the company operating waste and final disposal site.

    Part of portfolio optimization efforts.

    AM GreenInvestment in convertible bonds of a next-generation energy company.

    One of the main new investments made in the first half.

    LULUARQPE investment in a specialty capsule toy retailer.

    One of the new investments made in the first half.

    Risks & headwinds

    5
    Osaka IR project cost increase

    Increased from JPY 1.27 trillion to JPY 1.51 trillion

    Mitigation: Careful review of business income and expenditure plan; not expected to significantly impact project profitability.

    ORIX USA credit costs and impairment

    JPY 1.8 billion loss in H1 FY26 (JPY 18.1 billion decrease YoY)

    Mitigation: Disciplined investment policy, conservative deal selection, active portfolio management; countermeasures expected to be resolved by H2 FY26 or H1 FY27.

    Banking and Credit segment profit decrease

    JPY 600 million or 5% YoY decrease

    Mitigation: Asset management yield improving; active reshuffling of debt portfolio and recording losses to improve quality.

    Aircraft and Ships segment profit decrease

    JPY 10.1 billion or 31% YoY decrease

    Mitigation: Lease rates remaining high, number of owned aircraft increased, positive business climate.

    Environment and Energy segment mixed performance

    Some units (Elawan, ORIX's resource recycling) are near breakeven or in small deficit; no signs of major impairment loss.

    Mitigation: Business in recovery phase for Elawan; stable profit from mega solar projects.

    What to watch in Q3 FY26

    5

    ORIX USA credit loss resolution

    H2 FY26 or H1 FY27
    CurrentJPY 1.8 billion loss in H1 FY26 due to credit costs and impairment
    TargetResolution of countermeasures

    Why it matters

    This segment's performance has been a significant drag, and its recovery is crucial for overall profitability.

    So those potential risk, we are quite clear at ORIX USA side. So we don't foresee this kind of situation will continue. So at least by the end of this second half or at the latest in the beginning -- within the first half of next year, we will resolve. We will conclude our countermeasures.

    Q&A highlights

    5

    Inquiring about the rationale for establishing a joint PE fund with QIA, given ORIX's past 100% balance sheet investments, its impact on the balance sheet, and whether it's part of ROE enhancement efforts.

    Takahashi explained that the partnership with QIA, which was interested in Japanese investments, allows ORIX to leverage third-party funds for larger, higher-quality deals (JPY 30B+ market cap) while maintaining its own balance sheet for smaller investments. This shift to fund accounting (fair market value) rather than consolidated accounting is expected to benefit ROE and credit ratings by reducing asset bloating and easing goodwill recognition.

    “at this timing, we wanted to leverage our third-party funds to shift to leverage third parties funds to try to capture larger, better quality deals. It would be a benefit in our long-term growth. That's our strategy.”

    asked by Masao Muraki · answered by Hidetake Takahashi

    2 min read5 chapters

    Detailed Narrative

    01

    Earnings Forecast Revision and Shareholder Returns

    ORIX revised its full-year net profit forecast upwards to JPY 440 billion and pretax profit to JPY 640 billion, driven by strong first-half performance across finance, operation, and investment segments, including significant capital gains. This positive outlook led to an increased full-year dividend forecast of JPY 153.67 per share and an expanded share buyback program to JPY 150 billion, reflecting a total payout ratio expected to reach 73%.

    02

    Strategic Expansion in Asset Management

    The company is strengthening its asset management function, aiming for 11% ROE and JPY 100 trillion in AUM by FY28. A key milestone is the establishment of a USD 2.5 billion PE fund with the Qatar Investment Authority (QIA), marking ORIX's first incorporation of third-party funds into its PE business, targeting large-scale Japanese investments of JPY 30 billion or more.

    03

    Hilco Global Acquisition and Private Credit

    ORIX acquired Hilco Global, a US-based asset evaluation and disposal firm, to serve as a platform for ABL investment funds and expand its private credit business. Hilco's countercyclical nature and expertise are expected to enhance risk assessment capabilities and contribute to ORIX's asset management expansion, particularly in an uncertain economic environment.

    04

    Osaka IR Project Update

    The Osaka IR project, with construction underway, saw an increase in projected costs from JPY 1.27 trillion to approximately JPY 1.51 trillion due to inflation. Despite the higher costs, ORIX believes the project's profitability will not be significantly impacted, citing growing inbound demand in the Osaka-Kansai area and synergies with existing regional assets.

    05

    Ongoing Portfolio Optimization

    ORIX continues its disciplined portfolio management, utilizing a dashboard to visualize business performance and progressing with capital recycling. Recent divestitures include Greenko Energy, ORIX Credit, Ormat, Nissay Leasing, and Canara Robeco, guided by criteria such as growth potential, capital efficiency, credit rating impact, and group synergies.

    AI-generated summary of the company’s earnings call. Not investment advice.