Japan’s K Line has announced plans for a ¥100bn ($680m) share buyback as it looks to boost investor returns.
The shipowner said it plans to buy back up to 35.2m shares, equivalent to 12.4% of its outstanding common shares by the end of March 2023.
Effissimo Capital Management and Mizuho Bank — two major shareholders — have agreed to sell their shares in K Line as part of the buyback in quantities roughly corresponding to their current shareholdings.
K Line said this arrangement should “mitigate the potential impact on the stock liquidity and market stock price of K Line to some extent”.
The shipowner said it was “always conscious of capital efficiency” and its basic policy is to improve shareholder profits over the medium and long term by proactively promoting shareholder returns, including share buybacks.
“This is done by taking cash flow into consideration and ensuring the investment level and financial stability necessary to improve our corporate value,” K Line said.
Under its latest five-year medium-term management plan released in May 2022, K Line said it intended to return between ¥400bn and ¥500bn to shareholders.
“On top of the already announced interim and year-end dividends for the fiscal year 2022, we have also announced an additional shareholders’ return of ¥100bn or more,” the company said.
“Considering the scale of this additional shareholders’ return for the fiscal year 2022, the company has determined that the best way to do this will be to perform a share buyback for the entire amount.”
News of the share buyback came as K Line reported a first-half net profit of ¥565.4bn versus the ¥246bn achieved in the corresponding period last year.
K Line’s stake in Ocean Network Express (ONE) ¥504bn to net profit in the first half of the year against ¥235.5bn seen 12 months earlier.
Looking ahead, K Line said that although a degree of adjustment is expected in the containership market with the easing of supply chain disruptions, ordinary income for the full-year is forecast to be ¥710bn as it expects to maintain a solid level of earnings coupled with the impact of a weakening yen.
