Mitsubishi commits $27B investment over 3 years to fuel growth

Japanese trading giant Mitsubishi Corp has unveiled a three-year growth strategy that involves investing at least 4 trillion yen ($27 billion) by the 2027/28 financial year.

The company said it is targeting a net profit of 1.2 trillion yen for that period, up from the 700 billion yen it projects for the current fiscal year.

This strategy, announced on Thursday, includes aggressive capital spending and an expanded share buyback programme.

The firm also plans to maintain progressive dividends even as it recovers from recent impairment losses in its domestic offshore wind operations.

Growth investment starts in April

Mitsubishi said the 4 trillion yen spending will be split across sustaining capital expenditure and investments to accelerate long-term growth.

About 1 trillion yen is earmarked for ongoing operational needs, while more than 3 trillion yen will be directed towards new business initiatives and strategic investments.

The new plan kicked off in April and runs through March 2027.

The company also said it may consider using any excess cash beyond this allocation for additional shareholder returns or reinvestment, depending on the state of its project pipeline and broader market conditions.

The investment plan comes after Mitsubishi recorded a 52.2 billion yen impairment charge tied to its domestic offshore wind projects during the nine-month period ending in December.

That setback prompted a revised net profit forecast of 950 billion yen for the year ending 31 March 2024.

Dividend rises despite profit drop

For the financial year starting this month, Mitsubishi expects net profit to fall to 700 billion yen.

Despite the lower earnings forecast, the firm announced plans to increase its dividend by 10 yen, bringing it to 110 yen per share.

Along with the dividend hike, Mitsubishi outlined plans to repurchase up to 1 trillion yen worth of its shares between 4 April 2024 and 31 March 2026.

The company said its policy of progressive dividends and flexible buybacks remains unchanged under the new strategy.

These moves suggest Mitsubishi aims to maintain shareholder confidence while investing heavily in future growth.

Buffett-backed Mitsubishi

Mitsubishi’s largest shareholder is Berkshire Hathaway, the investment firm led by Warren Buffett. According to LSEG data, Berkshire holds a 9.67% stake in the Japanese trading house, making it a significant influence on long-term strategy.

Buffett’s interest in Japanese trading companies has drawn global attention over the past few years, and Mitsubishi has become one of the key beneficiaries of that focus.

With its new capital deployment plan, Mitsubishi appears to be aligning itself with investor expectations around capital efficiency and shareholder value.

The company’s emphasis on maintaining dividends and buybacks, even amid a dip in net profit, may also reflect this investor-driven approach.

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