Toyota Motor Corp. share price up, plans a buyback amid strong performance and increasing profit

The largest auto manufacturer in the world – Toyota Motor Corp. made an official statement, revealing that it plans a buyback of its stock for the first time in about five years due to increasing profit. The company explained that it will buy back up to 60 million of its own shares, or 1.89%, for about 360 billion yen until March 2015. This decision, however, requires the approval of Toyotas shareholders, whose official meeting is scheduled in late June.

One of the analysts, who work for NordLB – Mr. Frank Schwope said in a telephone interview for Bloomberg: “They have the cash and this is still a conservative amount that they’re buying back. This is good news for the company and ultimately the shareholders.”

In February this year the company announced that its net profit increased more than five times and reached 5.2 billion dollars in the quarter that ended in December 2013. Toyota Motor Corp. also increased its forecast for its net profit to 1.9 trillion yen and for its operating profit to 2.4 trillion yen for the full fiscal year that is to end in March 2014.

The buyback of the companys shares comes at a time when the president of Toyota – Akio Toyoda is starting the Toyota Mobility Foundation. It was explained by the company that the foundation in question is to back and corroborate global non-profit and researchers efforts to improve transportation systems in developing markets.

As reported by the Wall Street Journal, the Chief Exective Officer of Investrust – Hiroyuki Fukunaga commended: “The key to watch going forward is if Toyota engages in such buybacks more often, which very likely would compel its competitors to do the same. But if it appears to be just a one-time event, then enthusiasm for Toyotas stock might actually cool as investors realize that hoping for anything more is pointless.”

Toyota Motor Corp. has announced that it intends to pay 30% of its net income as dividends. According to a previous statement of the company, new car factories are not planned to be built until at least 2015 due to the fact Toyota is focused on improving the already existing plants efficiency. The company also revealed that it plans to cancel about 30 million of its own shares that are pending shareholder approval.

Toyota Motor Corp. rose by 1.96%, or 110 yen, to close the session in Tokyo at 5 731 yen, marking a one-year change of +16.96%. The auto maker is valued at 19.38 trillion yen. The 22 analysts offering 12-month price targets for Toyota Motor Corp. have a median target of 7 904.5 yen, with a high estimate of 9 600 yen and a low estimate of 6 200 yen. The median estimate represents a 40.62% increase from the previous close of 5 621 yen.