shin-etsu chemical announces massive share buyback amid tariff concerns

2025-04-25 general

Tokyo, Friday, 25 April 2025.
shin-etsu chemical co., ltd. just announced its largest share buyback ever, setting aside 500 billion yen. this move is designed to boost shareholder value. it specifically targets a 1.5-point increase in return on equity (roe). president yasuhiko saito assured investors that current tariffs are already factored into the company’s pricing strategy. the buyback, starting may 21 and running through april 24, 2026, aims to acquire up to 200 million shares.

buyback details and rationale

The buyback represents 10.2% of the company’s outstanding shares [3][7]. Shin-Etsu Chemical held ¥1,708.4 billion in cash and deposits at the end of March, exceeding its target upper limit of ¥1,600 billion [1]. This excess cash is being allocated to enhance shareholder returns [1]. According to President Saito, the buyback is projected to increase the company’s roe by 1.5 percentage points [1]. The roe for the fiscal year ending march 2025 was 12% [1]. Saito expressed dissatisfaction with the current roe level and emphasized the company’s commitment to improving profitability and implementing capital policies that consider total shareholder return [1].

market reaction and stock performance

Following the announcement, Shin-Etsu Chemical’s stock price saw a positive reaction [6]. The stock closed at ¥4,046 on the tokyo stock exchange, marking an increase of ¥123, or 3.14% [6]. This positive movement reflects investor confidence in the company’s decision to enhance shareholder value through the buyback program [6]. Throughout the week, the stock price fluctuated, with a weekly high of ¥4,075 and a low of ¥3,707 [6]. The cumulative trading volume for the week reached 30,684,900 shares [6].

earnings and future outlook

Shin-Etsu Chemical’s consolidated operating profit for the fiscal year ending march 2025 increased by 5.9% to ¥742.105 billion [2]. Net income attributable to the parent company’s shareholders rose by 2.7% to ¥534.021 billion [2]. While the company anticipates a 2% increase in sales to ¥610 billion for the first quarter of the fiscal year ending march 2026, net profit is expected to decline by 17% to ¥120 billion [1]. This projected decrease is attributed to the struggling polyvinyl chloride (pvc) market, impacted by increased production in china [1]. The company has not provided a full-year earnings forecast for the fiscal year ending march 2026, citing difficulties in making reasonable calculations due to trade and exchange rate uncertainties [2].

tariff impact and currency effects

President Saito stated that the direct impact of tariffs on the company’s products is low, affecting less than 2% of its output [1]. The company plans to offset tariff costs by passing them onto customers through price adjustments [1]. Currency exchange rates pose a challenge, as a ¥1 appreciation against the u.s. dollar could reduce recurring profit by approximately ¥4.7 billion annually [1]. Despite these headwinds, there are positive signs in the business environment, including recovery demand for pvc in the u.s. due to hurricane reconstruction and industrial demand from data centers [1].

Bronnen

Share Buyback Tariff Impact