Results of Operations and Financial Conditions

During the six months ended September 30, 2023, revenues increased ¥59,000 million, or 9.4%, to ¥685,500 million, and gross profit increased ¥11,900 million, or 10.5%, to ¥125,400 million, respectively, from the same period of the previous fiscal year. This was due to the elimination of valuation losses of operational investment securities in the International Business segment recorded in the same period of the previous fiscal year and an increase in income in the Automobility segment, despite a decrease in gain on sales of operational investment securities in the Specialty Financing segment.

Selling, general and administrative expenses increased ¥8,200 million, or 12.7%, to ¥72,300 million from the same period of the previous fiscal year, mainly due to increases in personnel and non-personnel expenses in the International Business segment and the Automobility segment.

Non-operating income and expenses decreased ¥400 million, or 5.5%, to an income of ¥6,100 million from the same period of the previous fiscal year. The decrease was mainly caused by a decline in equity in earnings of affiliates.

Due to the factors mentioned above, ordinary income increased ¥3,400 million, or 6.1%, to ¥59,200 million from the same period of the previous fiscal year.

Extraordinary income and losses were ¥1,700 million, income taxes increased ¥9,200 million, or 101.1%, to ¥18,300 million, and net income attributable to non-controlling interests increased ¥1,000 million, or 17.1%, to ¥7,000 million, respectively, from the same period of the previous fiscal year.

As a result, net income attributable to owners of parent was ¥35,600 million (net loss attributable to owners of parent of ¥6,300 million in the same period of the previous fiscal year).

Total assets at the end of the second quarter of the fiscal year ending March 31, 2024 increased ¥182,900 million, or 3.0%, to ¥6,265,000 million, and segment assets increased ¥188,600 million, or 3.5%, to ¥5,552,400 million from the end of the previous fiscal year mainly caused by foreign exchange fluctuations. Total liabilities increased ¥79,500 million, or 1.5%, to ¥5,272,600 million, and interest-bearing debts increased ¥127,700 million, or 2.8%, to ¥4,642,300 million, respectively, from the end of the previous fiscal year.

Total net assets increased ¥103,400 million, or 11.6%, to ¥992,400 million from the end of the previous fiscal year. This was mainly caused by a ¥26,400 million increase in retained earnings and a ¥65,000 million increase in translation adjustments.

As a result, the shareholders’ equity ratio increased by 1.4 percentage points compared with the end of the previous fiscal year to 13.9%.

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Overview of Business Results by Segment

With the organizational change on April 1, 2023, the Group separated and newly established the Environmental Infrastructure segment from the Specialty Financing segment with the aim of strengthening and expanding environmental energy businesses, such as renewable energy in Japan and overseas, to strongly support business strategy toward decarbonization, and changed its operating segments and other matters. With regard to the Mobility & Fleet Management segment, we renamed it to the Automobility segment. In addition, in the Medium-Term Management Plan 2027 adopted by the Company’s Board of Directors meeting held on May 12, 2023, we decided to align financial targets with net income-based figures.

In line with these changes, effective from the first quarter of the fiscal year ending March 31, 2024, the Group changed the reportable segments to the five segments, Equipment Leasing, Automobility, Specialty Financing, International Business, and Environmental Infrastructure. In addition, segment income was changed from ordinary income to net income attributable to owners of parent.

Revenues for each segment represent “revenues from customers,” and segment income or loss represents the amount for the “reportable segment.”

The following year-on-year comparisons are made with the figures of the previous fiscal year based on the changed classification.

Equipment Leasing

Revenues decreased ¥7,600 million, or 3.1%, to ¥233,500 million, and segment income decreased ¥700 million, or 5.4%, to ¥12,100 million, respectively, from the same period of the previous fiscal year. The decrease in segment income was mainly because of a decrease in the balance of segment assets primarily affected by promoting portfolio management focused on asset efficiency. The balance of segment assets decreased ¥75,300 million, or 5.8%, to ¥1,211,800 million from the end of the previous fiscal year. The decrease was mainly because of the transition of Orico Business Leasing Co., Ltd. (hereinafter “OBL”), which was a consolidated subsidiary of the Company, to an equity-method affiliate.

Automobility

Revenues increased ¥12,200 million, or 6.9%, to ¥189,200 million, and segment income increased ¥3,100 million, or 45.8%, to ¥9,900 million, respectively, from the same period of the previous fiscal year. The increase in segment income was mainly because of a significant improvement in profitability as a result of promoting highly efficient operations in the car rental business and an increase in gains on sales of lease and rental vehicles. The balance of segment assets decreased ¥145,400 million, or 23.8%, to ¥466,100 million from the end of the previous fiscal year. The decrease was mainly because of the transition of Orico Auto Leasing Co., Ltd. (hereinafter “OAL”), which was a consolidated subsidiary of the Company, to an equity-method affiliate.

Specialty Financing

Revenues increased ¥22,100 million, or 17.7%, to ¥147,100 million, and segment income amounted to ¥10,900 million (segment loss of ¥11,400 million in the same period of the previous fiscal year mainly caused by the recording of impairment loss on Russia-related aircraft). The balance of segment assets increased ¥321,200 million, or 12.9%, to ¥2,811,800 million from the end of the previous fiscal year mainly caused by foreign exchange fluctuations.

International Business

Revenues increased ¥14,500 million, or 21.8%, to ¥80,800 million, and segment income amounted to ¥4,400 million (segment loss of ¥10,500 million in the same period of the previous fiscal year mainly caused by the recording of valuation losses of operational investment securities held by consolidated subsidiaries). The balance of segment assets increased ¥102,100 million, or 15.6%, to ¥757,800 million from the end of the previous fiscal year mainly caused by foreign exchange fluctuations.

Environmental Infrastructure

Revenues increased ¥17,900 million, or 107.5%, to ¥34,500 million, and segment income increased ¥2,300 million, or 187.5%, to ¥3,500 million, respectively, from the same period of the previous fiscal year. The increase in segment income was mainly due to the elimination of trial operating cost and revenue recognition of the electric power generation business recorded in the same period of the previous fiscal year. The balance of segment assets decreased ¥15,700 million, or 5.6%, to ¥262,200 million from the end of the previous fiscal year.

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