Orix Corp Ads NYSE: IX reported first-quarter net income of JPY 280.8 billion for the three months ended June 30, 2026, up JPY 173.5 billion from a year earlier and the company’s highest quarterly profit on record. The result represented 53% progress toward its unchanged full-year net income forecast of JPY 530 billion.
Chief Financial Officer and Chief Strategy Officer Masataka Yamada said the quarter was significantly supported by gains tied to Kioxia shares held by Toshiba, an ORIX investee. The company recorded JPY 121.7 billion in Kioxia sale and valuation gains during the quarter, while adjusted profits were JPY 159.1 billion.
Kioxia Share Price Adds Earnings Volatility
ORIX forecast first-half net income of JPY 840 billion, including JPY 540 billion of Kioxia-related sale and valuation gains and JPY 300 billion of adjusted profits. The first-half calculation was based on Kioxia’s share price at the end of June of JPY 89,680.
However, Yamada said the company retained its JPY 530 billion full-year forecast because Kioxia-related results are difficult to predict. He noted that every JPY 10,000 move in Kioxia’s share price changes ORIX’s after-tax Kioxia sale and valuation gains by JPY 57 billion. Kioxia’s share price had declined to JPY 54,300 as of Aug. 5, compared with the June-end level used in the first-half forecast.
“Depending on Kioxia’s share price at the end of September, we may record Kioxia sale and valuation losses in the third quarter,” Yamada said. He added that the company expects improved core earnings power to support adjusted-profit growth during the second half.
During the question-and-answer session, Investor Relations Operating Officer Kazuki Yamamoto said ORIX has a pipeline expected to help make up a slight shortfall versus its full-year adjusted-profit objective, though the company had not incorporated those expectations into its formal outlook. Management also said it was considering how to address Kioxia-related volatility in its return-on-equity framework and would update investors when it reaches a decision.
Dividend Policy Shift Centers on Adjusted Profits
ORIX changed its dividend policy to use adjusted profits, rather than accounting net income including Kioxia-related gains and losses, as the source for dividends. Adjusted profits exclude the after-tax portion of Toshiba-related investment gains and losses associated with Kioxia share sales and valuation changes.
The company maintained its policy of paying the higher of a 39% payout ratio or the prior year’s dividend of JPY 156.10 per share. Based on the first-half adjusted-profit forecast of JPY 300 billion, ORIX set its interim dividend at JPY 107.27 per share. The company forecast a full-year dividend of JPY 187.36 per share.
Yamamoto said non-cash Kioxia-related gains and losses will be excluded under the revised policy. If Toshiba sells Kioxia shares and ORIX receives cash proceeds, the company could consider using part of those proceeds for shareholder returns, he said.
ORIX also continued its JPY 250 billion share repurchase program announced in May. As of the end of July, the company had repurchased JPY 78.4 billion, or 31% of the authorized amount. Its full-year payout ratio, including dividends and buybacks, remained 85.9%.
Core Businesses and Capital Recycling
Management highlighted improving operating performance across several businesses. In Europe, Robeco and other asset-management operations expanded assets under management, aided primarily by market appreciation as well as new client money, lifting fee income. Yamamoto said first-quarter growth was particularly strong, though the company does not assume further market appreciation in its second-quarter planning.
The transportation equipment businesses also benefited from favorable market conditions. Aircraft leasing, Avolon and Ships each posted year-over-year profit growth, according to management.
- Japan and APAC: Segment profit was JPY 289.8 billion, including approximately JPY 62.3 billion in gains from the sale of domestic private-equity investee SUGIKO and JPY 179.8 billion of Kioxia-related gains.
- Infrastructure: Segment profit was JPY 43.3 billion, down from a year earlier because the prior-year quarter included large sales gains. Excluding that comparison, management said profit increased.
- U.S. and Europe: Segment profit rose JPY 52.4 billion year over year to JPY 63 billion, supported by fair-value gains from U.S. private-equity investments and higher European asset-management fees.
- Insurance: Segment profit increased JPY 3.9 billion to JPY 28 billion, led by yen-denominated whole life insurance products, higher-value corporate contracts and strong investment income.
Total segment assets were JPY 14.4261 trillion, up JPY 190.9 billion year over year. Total assets, including discontinued operations, were JPY 18.257 trillion.
Bank Sale, AerFin Deal and Investment Pipeline
ORIX completed the transfer of all ORIX Bank shares to Daiwa Securities Group on Aug. 3. The company also announced an agreement to acquire 100% of AerFin, an aircraft parts-out company, through ORIX Aviation.
Yamada said AerFin is expected to broaden ORIX’s aircraft value chain from leasing to post-retirement parts utilization and asset-management services. He also cited potential customer-referral opportunities because ORIX’s aircraft-leasing customer base and AerFin’s customer base do not fully overlap.
During the quarter, ORIX reported JPY 115.7 billion in capital gains and approximately JPY 300 billion of capital-recycling cash inflows, compared with roughly JPY 80 billion in investment outflows. The company exited several private-equity investments, including SUGIKO, Peak Utility and Network Connex, while also selling logistics facilities and multiple aircraft.
Management said it has a “rich pipeline” of potential investments but is remaining selective amid elevated valuations in some sectors. Areas of focus include domestic real estate, private equity, aircraft, ships and Osaka integrated-resort-related investments.
About Orix Corp Ads (NYSE:IX)
ORIX Corporation ADS NYSE: IX is the American depositary share listing of ORIX Corporation, a diversified financial services group headquartered in Tokyo, Japan. The company operates across multiple business lines that include leasing and lending, real estate, investment and asset management, and a range of retail and corporate financial services. ORIX's ADS program allows U.S. investors to access ownership in the Tokyo-based group through shares traded on the New York Stock Exchange.
Core activities include equipment leasing and installment financing for corporate customers, corporate lending and structured finance, and real estate development and property management.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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