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Q: You became COO in
January 2011. What
do you consider as
your mission in the
position?
MymainmissionasORIXCOOistoimplementspecificmeasures,suchassettingkeyperformance
indicators,andsteadilyimplementthesetoachieveourmedium-termtargetof10%returnonequity
(ROE).Theissueiswhetherwecanincreasethepaceof“Finance+Services”andembracegrowth
inemergingmarketssuchasAsia.TodothisIthinkit’snecessarytoimplementspecificbusiness
strategiesoverthenextcoupleofyearsandshowtheresultsthroughimprovedperformance.
Toward achieving 10% ROE
ThebusinessenvironmentforORIXisintheprocessofamoderateoverallrecovery,butIdon’tthinkwe
willseeareturntothebusinessmodelofincreasingleveragetogeneratehigherearnings.Overthelastfew
yearswehavedecreasedourleverageinresponsetotheeconomicslowdownandcredittightening,and
consideringfuturegrowthitisnecessarytocontrolleveragewiththecurrentlevelasthelowerlimit.
To achieve an ROE of 10% while controlling leverage, it will be essential for us to increase our
return on assets (ROA), an indicator of profitability. We will achieve this by devoting management resourcestobusinessesthattakethegreatestadvantageofORIX’sstrengths.Thereisawiderangeofinvestmentopportunitiesinthemarket,butIdon’tthinkthatinvestmentswithlongcollectionperiodsaresuited
to ORIX. We will also constantly monitor our existing businesses and consider whether or not to
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continuethembasedonsuchfactorsaschangesinthebusinessenvironment,andthecurrentstate
ofourbusinessportfolioandclientbase.Forthebusinesseswedecidetocontinuetopursuewewill
concentratetheexpertiseoftheentireGroupandtakequickdecisiveaction.
Approach to risk
ORIXconsiders“goodrisks”tobethosethatwejudgetobeworthtakingforgrowthaftercarefully
weighingaproposalbasedonourownexpertise.Activelytakingthesetypesofgoodrisksbecomesa
sourceofearnings.ORIXtakestheleadinallaspectsofitsbusiness,fromsearchingforapartnerto
uncovering a potential project, arranging the structure of a project, funding a project, negotiating
conditionsandmakingtheinvestmentdecisions,allwithoutrelyingonthejudgmentofothers.We
haveexperiencedmanydifficultcircumstances,includingtheAsianfinancialcrisis,theslumpinthe
shippingbusiness,thecollapseofJapan’seconomicbubbleandthefailureofLehmanBrothers.At
timeswe,too,havemademistakes,buttheknow-howwehaveamassedfromthisisoneofourgreatest strengths. These past experiences and previous failures are of great benefit particularly when
makinginvestmentdecisions,andareacatalystforgeneratingnewideas.
Q: Please give us an
overview of business
results for fiscal 2010.
Fiscal2010wasayearinwhichwetookstepstorestoreearnings,andclearlyfelttheshiftofmanagement
fromthedefensiveposturewehadadopteduntilrecentlytooneofresumingagrowth-orientedtrack.We
achievedthemanagementgoalofprofitabilityinallbusinesssegmentsannouncedatthebeginningofthe
year,andincreasednetincomeattributabletoORIXCorporationby78%yearonyearto¥67.3billion.
TheOverseasBusinesssegmentcontinueditsrobustperformancefromthepreviousfiscalyear
(fiscal2009),whiletheRetailandMaintenanceLeasingsegmentsalsoperformedwell.TheCorporate
FinancialServicesandInvestmentBankingsegmentsreturnedtoprofitability.Asaresultofassetreductionscenteredonloanstorealestate–relatedbusinessesandnon-recourseloans,alongwiththeacquisitionofhigh-qualityassets,weincreasedsegmentROAto1.1%onanafter-taxbasis,upfrom0.6%
duringthepreviousfiscalyear.Further,weenhancedthestabilityofourfinancialpositionbyincreasing
theratiooflong-termdebttototaldebtanddiversifyingfundingsourceswithvariedstraightbondissuances.
InJapan,wemanagedtoenhanceprofitabilitybyexpandingservice-relatedfeeincomealong
withthegrowthofourcustomerbaseasaresultofGroup-widemeasurescenteredontheCorporate
FinancialServicesandMaintenanceLeasingsegments.IntheRealEstatesegment,wherewehave
beenpromotingassetturnover,wereducedsegmentassetsby8%fromthepreviousfiscalyear,and
provisionsfordoubtfulreceivablesandprobableloanlossesfornon-recourseloanshavedecreased.
IntheInvestmentBankingsegment,profitsfromthesaleofmajorinvestmentsandtheservicerfunctionremainedrobust.IntheRetailsegment,performanceinthelifeinsurancebusinesshasbegun
toreflectourrecentstrategyofshiftingto“thirdsector”(medicalandcancerinsurance)products.
The banking business’s operating assets exceeded ¥1 trillion, and loans to corporate clients are
steadilyincreasing.
TheOverseasBusinesssegment,particularlyintheUnitedStates,hasputintoplaceastructureto
strengthenthe“Finance+Services”modelthroughtheacquisitionofloanservicingandassetmanagementcompanies,whichhasresultedinagrowingbaseofstablerevenues.
InAsia,weareembracingthegrowthoftheentireregionbyprovidingfinancialservicesthatmeet
theneedsandlevelofgrowthineachcountry,alongwiththesteadygrowthofourexistingbusiness
basedonabusinessplatformthatwehaveestablishedoverthelast40years.
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Q: What are your
management strategies
and earnings forecasts
for fiscal 2011?
For fiscal 2011 (ending March 31, 2012) we are forecasting a 15% year-on-year increase in net
incomeattributabletoORIXCorporationto¥77.5billion,onaconsolidatedbasis.Webelievethat
implementing measures in line with our two management strategies of “Finance + Services” and
embracinggrowthinemergingmarketssuchasAsiawillputusfirmlyonagrowthtrack.
Oneofthedriversforearningsduringfiscal2011willbetheOverseasBusinesssegment.We
arepursuingavarietyofprojectsintherapidlygrowingChinesemarket,andwhilediversifying
risk, are working with local partners to uncover highly profitable investment opportunities. In
otherareasofAsiawearedevelopingbusinessesthatcapitalizeonGroupstrengths,andplanto
nurtureourfutureearningsdriversfromamongthese.IntheAmericas,wewillsteadilyexpand
theassetmanagementbusinessthatwasacquiredthroughM&A,andexplorebusinessopportunitiesinCentralandSouthAmerica.
In Japan we will further increase the pace of the “Finance + Services” model we have been
promoting in recent years. Using the Corporate Financial Services segment as a platform, we will
continuetoconsolidateinformationfromawiderangeofindustries,andprovidehighlyspecialized
servicesandcompetitiveproducts.Ibelievethatcapitalizingonthefurtherverticalandhorizontal
integrationoftheGroup’swide-rangingexpertisewillallowustocapturenewearningsopportunities.
Q: Finally, what is your
vision for ORIX?
TheORIXGroupisanextremelyuniquebusinessgroupunparalleledintheworld,withtheflexibility
to develop businesses in a wide range of fields other than finance, while responding to customer
needs.Atthesametime,becausewehavesomanybusinessinterests,ORIXissometimesconsideredbythoseontheoutsidetobeacorporationthatisextremelydifficulttounderstand.
Also, ORIX’s corporate philosophy is “constantly anticipating market needs and working to
contributetosocietybydevelopingleadingfinancialservicesonaglobalscaleandstrivingtooffer
innovativeproductsthatcreatenewvalueforcustomers.”Ibelievethatthecreationofnewvalue—
andofferingthatvaluetocustomers,communitiesandsociety—leadstocorporategrowth.Through
businessactivitiessuchastheseIbelievethatORIXcanmakeitselfmorefamiliartoitscustomers
andsocietyatlarge,andshedtheimageofbeingdifficulttounderstand.
Also,ORIXhasalargenumberofcustomersinJapanandoverseas.Itispossibleforus,for
example,toprovideJapanesecustomerswitharangeoffinancialsupport,aswellastoaidthem
inoverseasexpansionbyhelpingthemfindbusinesspartnersbyutilizingtheORIXGroupoverseas network. We want to utilize these collective capabilities of the Group to actively pursue
business activities that respond to the needs of customers, and contribute in some way to
communitiesandsociety.
Further, whether in Japan or overseas, exploring all manner of possibilities for entering new
businesses,includingthroughM&Aactivities,andenhancingtheexpertiseoftheGroup,willleadto
thenextstageofgrowth.
July2011
Makoto Inoue
Director,RepresentativeExecutiveOfficer
PresidentandChiefOperatingOfficer
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