Orix Corporation - ADR

FY26 results: strong record profitability despite impairments - Net income JPY 447.3bn, exceeding the revised forecast JPY 440bn (raised at H1); +27% YoY (+JPY 95.6bn) and ROE 10.4% (+1.6ppt YoY). - Q4 net income JPY 57.6bn but offset by total impairments of JPY 97.2bn (mainly ORIX USA). - Key driver of impairment: at OCP / ORIX Capital Partners they are phasing out PE business and doing capital recycling → goodwill impairment in Q4.

Earnings engine (FY26): finance + operations + investment all grew, with investment gains playing a major role - FY26 pretax profits JPY 691.4bn (+44% YoY, +JPY 211bn). - By category: - Finance: growth from Insurance investment income and fee income in Corporate Financial Services (+JPY 12.9bn, +7%). - Operations: growth from inbound/leases and some stake sales/gains (e.g., hotels/airport concessions, Rentec autos & ships; plus stake sales + Zeeklite gains) (+JPY 37bn, +18%). - Investments: +JPY 138.1bn (+82%), largely driven by realized gains (notably Greenko stake sales/valuation; plus real estate + PE/earnings such as Toshiba). - Notable “surprise/good”: they explicitly say investment profit growth would remain strong even excluding ~JPY 95bn Greenko gains—i.e., recurring-ish momentum beyond one-off.

FY27 guidance: net income expected to rise, but “investments” profits expected to decline - FY27 (ending Mar 2027) target net income JPY 530bn (+JPY 82.7bn YoY), ROE target 11.7%. - FY27 pretax profit target JPY 760bn (+10% YoY). - Category outlook: - Finance: expected major uplift to segment profit JPY 308.3bn (+63% YoY) including planned ORIX Bank share transfer gain ~JPY 124.2bn (pretax) plus contribution from ORIX USA. - Operations: modest growth to JPY 240.7bn (+2% YoY), with inbound pressured by geopolitical tensions. - Investments: total JPY 290bn, where they guide for decline vs FY26 overall, because FY26 included large Greenko gains; however, investments should still increase if excluding the FY26 Greenko-related ~JPY 95bn.