Toyota buying back stock for first time since 2009 as cash grows

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TOKYO (Bloomberg) -- Toyota Motor Corp. said it will buy back stock for the first time in five years as its cash pile swells and profit climbs.

Toyota will repurchase as many as 60 million shares, equivalent to a 1.9 percent stake, for 360 billion yen ($3.5 billion), according to a statement Tuesday. The company, which last bought back stock in February 2009, plans to retire about half of those shares by the end of June.

Toyota’s growing cash pile fueled calls from the likes of Takaki Nakanishi, Institutional Investor magazine’s top-ranked Japanese auto analyst, for the company to return money to shareholders or invest in new factories. The maker of the Camry sedans and Prius hybrids has forecast a record 1.9 trillion yen profit for the year ending March 31.

“They have the cash and this is still a conservative amount that they’re buying back,” Frank Schwope, a Hanover-based analyst at NordLB who recommends buying Toyota, said by telephone. “This is good news for the company and ultimately the shareholders."

The buyback coincides with President Akio Toyoda starting the Toyota Mobility Foundation, which will support global nonprofits and researchers’ work on improving transportation systems in developing markets, the company said.

Charity donation

Toyota plans to sell 30 million of its shares to the foundation at a discounted price of 1 yen apiece so that the charity can use the stock to fund future activities. The company said it will provide about 3 billion yen to 4.5 billion yen to the foundation each year, with the plan pending approval from shareholders at the annual general meeting in June.

Toyota has said it aims to pay 30 percent of net income as dividends and that the company won’t build any new factories until at least 2015 as it focuses on improving efficiency at existing plants.

With Toyota reluctant to spend on new factories, Nakanishi, an analyst for Jefferies Group LLC, said last month that the carmaker’s shareholder return policy was ‘‘the most significant driver” of its stock performance.

“Increased expectations of further yen depreciation, appropriate growth in investment, and enhancements to intrinsic product strength will be needed before we can look for share price performance to turn up,” Nakanishi wrote in a report last month.

Toyoda era

Toyoda, 57, has steered the company founded by his grandfather through a recovery after a series of crises. After Lehman Brothers Holdings Inc.’s collapse in 2008 led to a global recession that dented auto demand, the automaker recalled more than 10 million vehicles the next two years to fix problems related to unintended acceleration.

This month, Toyota agreed to pay a $1.2 billion fine, the largest penalty of its kind imposed on any automaker, to end a U.S. criminal probe after the Department of Justice said the company intentionally concealed information and misled the public about safety defects in its cars.

In each of the last two years, Toyota has rebounded by outselling all other automakers and the company is targeting more than 10 million deliveries this year.

Toyota’s cash, equivalents and short-term investments climbed to 3.57 trillion yen by the end of December, from 2.77 trillion yen a year earlier.

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