Japanese robot maker Fanuc considers dividend hikes and stock buybacks


Japanese robot maker Fanuc considers dividend hikes and stock buybacks for better shareholder returns

Friday, Mar 13, 2015

* Fanuc says to launch shareholder relations division

* Loeb's Third Point has urged Fanuc to boost buybacks

* Fanuc known for hoarding cash

* Shares jump 13 pct to record high (Recasts with Fanuc statement, details on Loeb)

Japanese robot maker Fanuc Corp is considering dividend hikes and stock buybacks, its president was quoted on Friday as saying, after demands by activist investor Daniel Loeb for better shareholder returns.

Fanuc shares rose as high as 13 percent to a record high after President Yoshiharu Inaba told the Nikkei newspaper the company would set up a shareholder relations department.

A spokesman said the unit would be set up by April 1 and confirmed that Fanuc wanted to better engage investors.

"We will also give consideration to shareholder returns through such engagement," spokesman Keisuke Fujii added.

Loeb, one of the most closely watched and influential investors in the hedge fund industry, last month told Reuters Fanuc had an "embarrassment of riches" on its balance sheet which needed to be fixed through major buybacks.

Loeb also said his fund, Third Point, is likely one of the largest shareholders in Fanuc, which is renowned for its innovative automation technology as well as its minimal interaction with shareholders.

Spokesman Fujii said Fanuc was responding to a recent regulatory push for improved corporate governance, and not Loeb's demands.

A Third Point spokesman did not immediately comment. Shares in Fanuc are currently trading about 30 percent higher than what they were before Third Point announced it had taken a stake.

Fanuc's reluctance to engage shareholders stood out at a time when many Japanese companies, long criticised for neglecting investors in favour of employees, are taking steps to boost communications and governance.

Fanuc has no debt and ended its last fiscal year with cash and equivalents of 824 billion yen ($6.9 billion) and total assets of 1.3 trillion yen. It is also highly profitable, with operating margins of around 40 percent compared with under 10 percent for some of its peers.

Long criticised for hoarding cash, Fanuc last month unveiled plans to double its investment in a new factory, but Loeb said the move would not fix its "blatant capital inefficiency".

The company is considered to be one of the more unusual in Japan. It built its headquarters in a forest at the foot of Mount Fuji and holds annual general meetings there, obliging interested investors to make the three hour trip from Tokyo.

Yellow - the favourite colour of founder Seiuemon Inaba - dominates many of its facilities and is also the colour of the workers' uniforms and Fanuc's robots.