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