Investing in Japan: ORIX Corporation widens its business field further to optimize its profitability

ORIX is engaged in wide range of businesses from financial services to running a professional baseball team to operating an International Airport.

ORIX Corporation was founded in Osaka in 1964 as Orient Leasing Co., Ltd. In 1989, it changed its name to current ORIX Corporation and now is engaged in a wide range of fields  such as financial services for corporations, automobile leasing, rental car service, used car sales, car sharing, energy business, housing development business, real estate investment business, facility operation business. 

The company provides diversified financial services in Japan, the Americas, Asia, Europe, Australasia and the Middle East etc. Among Japanese, it is well known company for running a professional baseball team, ORIX Buffaloes. 

It is also known to invest in the operating company of Kansai International Airport. In the Chubu region too, it provides car renting service at many rental sites in the region. ORIX manages the second largest fleet of rental cars in the industry in Japan, with over 66,000 cars at more than 1,000 locations nationwide. 

Regarding the latest financial results, the spread of the new coronavirus infection had a major impact on its aircraft leasing and hotel business. As for the consolidated financial results in the year ended March 31, 2020, sales were 2,280.3 billion yen (down 6.3% year on year), operating income was 269.7 billion yen (down 18.1% year on year), and net income was 302.7 billion yen (down 6.5% year on year). 

Although sales and profits declined in FY 2020, the impact of COVID-19 on ORIX’s business results in the last term seems to have been limited. On the other hand, the consolidated financial forecast for the fiscal year ending March 2021 is undisclosed because it is difficult to forecast the impact of infection.

ORIX’s investment is beginning to contribute to profits

Regarding to recent business development, overseas investment by ORIX is beginning to contribute to profits. It seems that the investments made in the previous term, such as NXT Capital Group, LLC, which manages assets in the US, and Avolon Holdings Limited, a major aircraft leasing company in Ireland began to bring profit for ORIX. 

As for new projects in Japan, ORIX set up a new team in 2018 dedicated to support business succession because many managers in Japan face obstacles in finding successors of their business. Business succession has many issues including transfer of shares, finding and training successors, and taking over of business networks. 

ORIX’s service will provide managers with a grace period so that they can focus on solving issues. ORIX promotes so wide range of businesses fields that most Japanese know the company’s brand. However few Japanese know is that ORIX has been proving its excellent profitability in recent years with the ROE well above listed Japanese company’s average.