Japan's JFE plans to boost shareholder returns

TOKYO, Mar 9 (Reuters) JFE Holdings Inc., the world's fourth-biggest steel maker, said on Thursday it planned to boost returns to shareholders and capital investment over the next three years but profit will be maintained at the current level.

Japan's second-biggest steel maker said it planned to earmark 25 percent of its net profit for dividend payments under a new three-year business plan, compared with 18 percent in the previous three-year plan that ends on March 31.

''Our message is clear. We'll increase returns to shareholders and investments, but will no longer pursue expansion of production volume,'' Fumio Sudo, JFE's president and chief executive officer, told a news conference.

''Instead, we will increase production of high-quality sheet steel and aim to build a solid earnings platform that will constantly generate 500 billion yen in profit under any circumstances.'' JFE, created through a merger of two steel companies in 2002, said it would aim to post a group recurring pretax profit of 500 billion yen (.25 billion) in the year to March 2009, the same as its profit forecast for the current business year ending this month.

It planned capital investment, including loans, of 780 billion yen over the next three years, up nearly 50 percent from the previous three years.

Interesting-bearing debt will be cut to 800 billion yen in the year ending March 2009 from 1.2 trillion yen now.

The company plans to raise returns to shareholders further if its debt-to-equity ratio falls below 0.5, Sudo said. The ratio currently stands at 0.96.

JFE's expected recurring profit for the current year is nearly five times higher than the 104.7 billion yen it posted in the year to March 2003.

Under its previous three-year plan, profits rose thanks to restructuring, booming demand for high-quality sheet steel used in cars and ships and strong demand from China.

Larger rival steelmaker Nippon Steel Corp. said in December it aimed for pretax profit growth of more than 14 percent in the next three years, confirming market views that an era of rapid profit growth is over.

Nippon Steel's profit rose more than seven times under its current three-year plan, which ends in March.

Nippon Steel, the world's third-biggest steel maker, is targetting more than 500 billion yen in pretax recurring profit before extraordinary items in the year to March 2009.

REUTERS PR RN1518