| World's top auto maker Toyota Motor Corp. may | | | | flooded when Toyota absorbed securities from |
| continue spending $2 billion or more a year to buy | | | | Japan's debt-riddled banks, which were removing |
| back its own shares for another 6-7 years. This | | | | shares to shore up their finances. |
| was contrary to widely held views it was winding | | | | Those lenders are now healthy because the stock |
| down the practice. | | | | sales have run their course. Several market |
| For many investors, who assumed Japan's | | | | analysts forecasted that Toyota would have little |
| most-profitable company would pay attention | | | | reason to continue such aggressive buybacks. |
| instead on rewarding shareholders by paying | | | | The Japanese company said the buybacks were |
| higher dividends, that is good news. | | | | one way to hold its return on equity (ROE), a |
| Such premise initiated from President Katsuaki | | | | measure of how well a company uses its funds, |
| Watanabe's comment a year ago. He stated that | | | | higher than 10 percent. The ROE is now |
| Toyota would aim to increase its group-based | | | | established above that as it reached 13 percent |
| dividend ratio to 30 percent as soon as possible in | | | | last year. But Toyota says it will pursue the |
| consonance with healthy Western companies. | | | | buybacks, without specifying an amount or a |
| That was the first time he had set a target for | | | | timeline. |
| the ratio, which was 23.4 percent last business | | | | Last week, Toyota shareholders affirmed the |
| year. | | | | reacquisition of up to 30 million shares or 250 billion |
| The policy has seemed a mess for a company as | | | | yen ($2.04 billion) over the next 12 months. |
| visible as Toyota. | | | | Toyota budgeted 200 billion yen a year earlier to |
| An official in the company's investor relations | | | | buy back up to 30 million shares. |
| department said that they probably have not | | | | Kurt Sanger, Macquarie Securities' auto analyst |
| been doing a good enough job in communicating | | | | who expects big buybacks even as Toyota nears |
| their position. The official said that the dividend | | | | a 30 percent dividend payout ratio, said the latest |
| policy is much simpler but they intend to continue | | | | pledge exceeded their expectations. He continued |
| the share buybacks not just to balance supply | | | | that consensus on forecasts are down playing |
| and demand in the market as many people might | | | | Toyota's earnings (per share) because they are |
| believe. | | | | not taking into consideration the buyback plans. |
| In 1997, Toyota started buying back its own | | | | Sanger had forecasted buybacks summing 230 |
| shares from the market to bolster their value. In | | | | billion yen over the next three years. Now, he has |
| the early part of this decade, the buybacks | | | | lifted that to 750 billion yen. |