Hitomaro Yano: Well, ships did not have a big impact. That was our assumption. That is why we put them together with the aircraft. But for first quarter of ’23 March, eight ships were sold and we gained a lot from that sales. Roughly speaking, in the first quarter last year, JPY4 billion profit in ships. And in this fiscal year, in this quarter, JPY2 billion. So that’s the scale as of June. And if we exclude that, the remainder is aircraft. And the aircraft is growing year-on-year. Lease fees are increasing overall. And also because of job, we can sell aircraft as well. So we expect to see growth going forward. For ships, we made a clear decision to sell. And the assumption was very clear. So when the situation is bad, we buy and when the situations are good, we always sell.
So there could be some ups and downs. But we also have [indiscernible] methodology for ships. We also have shipped loans as well. Marine vessel loans, which provides us with a spread based on the value of the vessel. And we can do this because we can operate the vessels and we can provide loans. And if anything happens, we can always repossess the vessel. And that is why we want to keep our steady method with ships at least for the time being. So aircraft is recovering steady in a nice way. And for this fiscal year, our profit for ships is lower than the prior year. But still, as you can see that already in the plan, that decline in ship can be more than compensated by the aircraft. That’s all from me, thank you.
Koki Sato: I just want to double-check the numbers. Last year, shipped JPY4 billion in the first quarter and the JPY2 billion this fiscal year. This is a very rough number. Okay? If that the rough number, if we exclude those numbers, non-Avolon aircraft is only increasing several hundreds of millions of yen. So it’s only a slight increase?
Hitomaro Yano: Yes, that’s correct.
Koki Sato: And the data book P&L shows, well, — this is no longer a segment operating profit. You’re using a different expression. But the equity method contribution prior to the contribution, the number is lower than the prior year. And on Y-o-Y, excluding Avolon, there is an increase in the equity method part. So aircraft recovery is contributing to the first quarter basically in the equity method — this Avolon equity method, a profit increase in Avolon. Let me double-check. I’m not saying anything wrong, I’m I?
Hitomaro Yano: Avalon profit, Avolon does its own earnings announcement. And one month later, we can capture the profit to our financials. So that is why we see increase in the equity method. But we’re also charging interest rate for that investment and the US interest rate is going up, that’s negative. So Avolon recovery looks weak if you just look at the segment profit that is the current status. Aircraft and ship sometimes, we have a joint venture with funds to own aircraft and vessels. And sometimes, we have equity method applied to the profit and losses, but that’s quite rare. So this equity method profit or loss is mostly Avolon related. Debt cost, this is profit before the charging of the debt cost.
Koki Sato: That’s very clear. Thank you very much.
Hitomaro Yano: Thank you.
Operator: Question from Okada, from UBS Securities. Please.
Taiki Okada: I’m Okada from UBS Securities. As for myself, I’d like to ask a question about the Page 28. I’m referring to your US businesses. So the three businesses of United States need explaining a little more into detail. As compared to three months ago, in each of these segments, what has changed? And if we were to refer to the base of profit, the credit has returned. However, real estate private equity on a year-over-year basis, unfortunately, you have experienced a decline. So as compared to three months ago, I think your view to US economy may have improved. But based on those backdrops, in other words, the economic environment or conditions, how do you foresee the businesses trending going forward?
Hitomaro Yano: So as for the US businesses, well, we would, of course, hope that to increase the top-line for sure. But the credit so far, we have not been increasing the bad loans or bad debt. And of course, for the time being, because I will not be able to say anything in a manner for the future. But we think that the current trend can be continued. But as for the base profit for the real estate, it is difficult to segregate the two. The Boston Financial for the low-income bracket people, we securitize the real estate asset. But it varies from quarter-to-quarter. This quarter, there was none, and this is why the base profit, unfortunately, we experienced a decline. As for PE investment, unfortunately, so exit is not that smooth at this point in time.
And this is why private PE was on decline in terms of the base profit. So the investee of the PE, we are charging the interest rate and the cost impact has been rising. So this has resulted in the negative consequences. So that, in fact, are the major factors to the negative base profit. And we have been, of course, giving other directions to ORIX USA, not to overstretch and because you see the current conditions that does not allow them to be that successful with the businesses that we have been running. So by making use of — by making use of the leverages, and if the PE investment may start to recover, we may be able to enjoy a better performance going forward. I hope this answers your question.
