Toyota has increased the size of its share buyback program to ¥1.2 trillion ($8.3 billion), as the world’s largest automaker benefits from strong demand in key markets Japan, Europe and North America.
The Japanese manufacturer added ¥200 billion to a ¥1 trillion share buyback plan announced in May, according to a stock exchange filing on Tuesday. That means the company will likely buy back as much as 3.93% of its shares. The decision was based on “recent stock price levels,” the company said.
The move wasn’t necessarily a surprise, said Tatsuo Yoshida, a senior auto analyst at Bloomberg Intelligence. The reduction in strategic stocks “will continue, as will Toyota’s efforts to electrify its fleet, but the pace will be determined by the impact it will have on the market,” he said.
Toyota’s shares are largely flat compared with January levels, up just 1% this year compared with the 225-issue Nikkei average’s rise of 13.4%. At the same time, Toyota is delivering robust financial results.
The automaker’s operating profit for the three months ended June 30 was ¥1.31 trillion, up 17 percent from a year earlier. Its hybrid models are selling well in North America, while a weaker yen is helping boost earnings in Toyota’s home currency.
The share buyback program, announced in May, will run until April 2025, Toyota said in the statement.
The increased share buybacks also fit with the government’s broader push to encourage large companies to divest cross-shareholdings that have built up over decades to strengthen business relationships.
In July, Toyota announced it would buy back ¥806.8 billion of its own shares from major Japanese banks and insurers, as part of a broader effort to unwind strategic equity holdings with financial partners.
Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group will divest strategic equity stakes in Toyota worth ¥1.32 trillion, Bloomberg previously reported.
