Toyota plans $1.8bn share buyback after strong Q2

Toyota Motor Corp. has lowered its forecast for annual global car sales by 2.7 percent to 10.7 million units, weighed by weakening demand in India, Indonesia and Thailand. (AFP)
Updated 07 November 2019

Toyota plans $1.8bn share buyback after strong Q2

  • Operating profit rises 14% as automaker enjoys its strongest second quarter since 2015

TOKYO: Toyota Motor Corp plans a $1.8 billion share buyback, Japan’s biggest automaker said, after beating quarterly forecasts on higher global vehicle sales and an improved performance in North America.

Operating profit rose 14 percent to 662.3 billion yen ($6.1 billion) for the three months to Sept. 30 as Toyota enjoyed its strongest second quarter since 2015.

The profit beat an average forecast of 592.3 billion yen, based on estimates from nine analysts, Refinitiv data showed.

It sold 2.75 million vehicles globally, up from 2.18 million a year earlier.

Sales in North America, Toyota’s biggest market, rose 5.6 percent, while sales in Asia climbed 3.4 percent. Operating profit in North America, which has been a sore spot for Toyota over the past two years, more than doubled helped by less discounting.

“New models of the RAV4 and the Corolla, as well as last year’s Camry, have been well received in North America, so we’ve been able to lower incentives,” Operating Officer Kenta Kon said.

Toyota said it would buy back up to $1.8 billion worth of its common stock, or 34 million shares, by end-March.

It maintained its forecast for operating profit in the year to March to fall 2.7 percent, after three years of gains, as it expects a strengthening yen to weigh.

It lowered its forecast for annual global car sales by 2.7 percent to 10.7 million units, weighed by weakening demand in India, Indonesia and Thailand. Still, it expects record sales topping last year’s 10.6 million.

Toyota’s projected profit slip is subdued versus smaller rivals including Mitsubishi Motors, Subaru and Mazda, which have slashed their full-year outlooks by up to 67 percent this month amid weaker demand for their cars.

Many of them acknowledge they are struggling to contain costs.

Lee’s death sparks hope for Samsung shake-up, dividends

Updated 26 October 2020

Lee’s death sparks hope for Samsung shake-up, dividends

  • Shares in the company and affiliates rise; around $9bn in tax estimated for stockholdings alone

SEOUL: Shares in Samsung Electronics Co. Ltd. and affiliates rose on Monday after the death a day earlier of Chairman Lee Kun-hee sparked hopes for stake sales, higher dividends and long-awaited restructuring, analysts said.

Investors are betting that the imperatives of maintaining Lee family control and paying inheritance tax — estimated at about 10 trillion won ($8.9 billion) for listed stockholdings alone — will be the catalyst for change, although analysts are divided on what form that change will take.

Shares in Samsung C&T and Samsung Life Insurance closed up 13.5 percent at a two-month high and 3.8 percent, respectively, while shares in Samsung SDS also rose. Samsung Electronics — the jewel in the group’s crown — finished 0.3 percent higher.

Son and heir apparent Jay Y. Lee has a 17.3 percent stake in Samsung C&T, the de facto holding firm, while the late Lee was the top shareholder of Samsung Life with 20.76 percent stake.

“The inheritance tax is outrageous, so family members might have no choice but to sell stakes in some non-core firms” such as Samsung Life, said NH Investment Securities analyst Kim Dong-yang.

“It may be likely for Samsung C&T to consider increasing dividends for the family to cover such a high inheritance tax,” KB Securities analyst Jeong Dong-ik said. Lee, 78, died on Sunday, six years after he was hospitalized due to heart attack in 2014. Since then, Samsung carried out a flurry of stake sales and restructuring to streamline the sprawling conglomerate and cement the junior Lee’s control.

Investors have long anticipated a further shake-up in the event of Lee’s death, hoping for gains from restructuring to strengthen de facto holding company Samsung C&T’s control of Samsung Electronics, such as Samsung C&T buying an affiliate’s stake in the tech giant.

“At this point, it is difficult to expect when Samsung Group will kick off with a restructuring process as Jay Y. Lee is still facing trials, making it difficult for the group’s management to begin organizational changes,” Jeong said.

Lee is in two trials for suspected accounting fraud and stock price manipulation, as well as for his role in a bribery scandal that triggered the impeachment of former South Korean President Park Geun-hye. The second trial resumed hearings on Monday.

Lee did not attend the trial on Monday, as Samsung executives joined other business and political leaders for the second day of funeral services for his father.