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Toshiba in Turmoil

Toshiba considers paying first dividend in 4 years

Rebounding company looks to reward shareholders and chart new course for growth

Toshiba is now ready to repay shareholders for sticking by a difficult few years.   © Reuters

TOKYO -- Toshiba's increasingly bright outlook has spurred an internal debate on whether it will pay dividends for the first time in four years, as the Japanese company looks to reward longtime shareholders following years of unrest, Chief Financial Officer Masayoshi Hirata told Nikkei.

Toshiba projects an operating profit of 70 billion yen ($627 million) for the year ending in March. But it could see roughly 20 billion yen in additional profit if the yen remains as soft as it is now, Hirata said. The Japanese currency is currently trading at around 110 yen to a dollar, weaker than the company's assumed rate for the year of 100 yen per dollar.

"Our system LSI [large-scale integration] business will benefit from the weaker yen, and the social infrastructure business is also likely to fare well," he said.

In light of these developments, the company recently began considering resuming payouts, Hirata said. The amount, if any, will be based on profit trends excluding one-time factors, such as the sale of Toshiba Memory in June.

It last paid an annual dividend of 4 yen per share in fiscal 2014.

The company increased cash on hand by more than 1 trillion yen through the Toshiba Memory sale. Toshiba has said it intends to spend about 700 billion yen to buy back stock, responding to demands from overseas funds that took part in a capital increase in December.

Toshiba Chief Financial Officer Masayoshi Hirata spoke with Nikkei about the company's plans for the future. (Photo by Takehiko Hama)

The stock repurchase, whose details are under discussion with a securities brokerage, will be "carried out promptly after we announce our medium-term business plan in November," Hirata said.

An accounting scandal in 2015 and massive losses at its nuclear power business through 2017 forced Toshiba to put investment on the back burner. The company is looking to turn a new leaf with its upcoming growth strategy.

Toshiba's immediate efforts to boost earnings potential will involve re-examining product designs to reduce materials costs, as well as optimizing the use of personnel, the executive said.

"Now is not the time for significant sales growth," he said. "We will first focus on raising our operating margin to 5%, then to 10% in the medium to long term in order to catch up with global rivals."

The company projects a margin of 1.9% for the current fiscal year.

The recent challenges prompted stronger compliance mechanisms in order to "create a new Toshiba," Hirata said. The Japanese company decided to unload the appliance and personal computers businesses and looks to sell its liquefied natural gas business, a noncore operation.

"It is a big help that we have reduced factors that squeeze earnings," Hirata said.

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