Kawasaki Kisen charts course to double ROE by fiscal 2019
TOKYO -- Kawasaki Kisen Kaisha will target a return on equity of 10% and earnings per share of 40 yen in its new five-year medium-term management plan, more than double the expected figures for fiscal 2014, on increased profits from such moves as introducing efficient large containerships.
The company will use these indicators as business targets for the first time as investors place more weight on them, President Jiro Asakura told The Nikkei.
ROE, or net profit divided by shareholders' equity, is an indicator of how efficiently a company uses its shareholders' money. Kawasaki Kisen had previously employed return on assets but will switch to ROE to "meet interest in the market," Asakura said. Its ROE of 4.6% last fiscal year fell short of the 8% average among listed companies.
EPS is calculated by dividing net profit by the number of outstanding shares. Investors follow it closely, since a rise can help lift the stock price. The inclusion of this indicator demonstrates the company's new emphasis on its share price.
Based on the current number of shares, the company needs to turn a 40 billion yen ($380 million) net profit in fiscal 2019 to meet its EPS target -- a significant increase from the 18 billion yen expected this year. Asakura is keen on increasing dividends and stock buybacks.
The company will start making full use of five new containerships with nearly double the maximum capacity of its existing models next fiscal year. More efficient transportation of goods and better fuel economy will likely boost profit by about 10 billion yen. The company will consider adding to the fleet, depending on demand, and will also adopt larger automobile carriers.
Kawasaki Kisen will also improve its financial position to prepare for boosting investment in liquefied natural gas transporters, which it sees as a future revenue source. The company plans to raise its capital ratio from 31% at the end of fiscal 2013 to 40% by the end of fiscal 2019. It also aims to shrink interest-bearing liabilities from 643 billion yen to about 500 billion yen.