Cash-rich Toyota to buy back shares worth up to $3.5 billion

Wed Mar 26, 2014 6:27am EDT
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By Yoko Kubota

TOKYO (Reuters) - Toyota Motor Corp (7203.T: Quote) will buy back up to 1.89 percent of its shares worth up to 360 billion yen ($3.5 billion) in what would be the automaker's biggest buyback in more than a decade.

Toyota, expecting record profits for the financial year ending March 31, is returning cash to shareholders and boosting its return on equity after its cash pile expanded to 1.8 trillion yen as of end-December.

The world's biggest automaker said on Wednesday it would sell 30 million shares to Japan Trustee Services Bank for a token sum of 1 yen per share, with the dividends used to fund a new foundation to support the auto industry's development and environmental protection.

The remaining 30 million shares will be cancelled.

"We want to reward our shareholders through this buyback and cancellation," Toyota spokesman Ryo Sakai said.

Toyota, helped by a weaker yen that boosts the profitability of its exports, has forecast a record 1.9 trillion yen net profit for the year to end-March.

The buyback is the first for the company in five years and its biggest since 2003, when it paid around 390 billion yen. It follows similar moves by several Japanese companies, including Canon Inc (7751.T: Quote), to boost return-on-equity, an indicator that is lower among Japanese corporations than the global average.

Some analysts said Toyota should have invested the extra cash to expand sales and production.   Continued...

Employees and a customer (C) walk in front of Toyota Motor's logo at the company's showroom in Tokyo March 12, 2014. REUTERS/Toru Hanai