Mitsui OSK targets higher profits and shareholder returns in new management plan

Mitsui OSK Group announced a new management plan on March 31 that targets a profit before tax of JPY420 billion ($2.8 billion) by fiscal year 2030. The company reported that this figure marks an increase from its previous goal of JPY240 billion.

Under the strategy beginning in fiscal 2026, the firm intends to allocate JPY1.81 trillion to business investments over the next five years. These expenditures include the delivery of 18 bulk carriers and 53 vessels for its energy segment, such as liquefied natural gas and liquefied petroleum gas carriers.

The firm stated it is focused on a hybrid business model to combine stable revenue with market-driven opportunities. It noted that its car carrier and chemical tanker operations serve as high-entry-barrier networks that help mitigate downside risks during periods of market volatility.

Financial targets for fiscal 2030 include reaching a return on equity of more than 10 per cent and a return on assets of 5.5 per cent. To improve capital efficiency, the company plans to recycle approximately JPY230 billion in real property assets over five years.

The shareholder return policy includes a progressive dividend starting at JPY205 per share for fiscal 2026. This strategy aims for a total payout ratio of approximately 40 per cent through dividends and flexible share buybacks.

Elliott Investment Management, an activist investor which recently acquired a stake in the company, reviewed the plan following its release. The investment firm described the initiatives as, "positive steps toward improving shareholder returns and increasing capital efficiency" in a statement released on April 1.

However, it expressed concern that the management plan, "does not go far enough in closing Mitsui OSK's significant gap in shareholder returns to its peers". The investment firm also cited the need for the company to address large unrealised gains from vessels and real estate on its balance sheet.

Elliott stated it remains committed to working with the firm to achieve the goal of trading at a premium to book value by, "concretely addressing the factors behind its deep undervaluation".

The management plan includes the introduction of a hard sail system on a new liquefied natural gas carrier. This technology is expected to contribute to lower fuel usage according to a statement from Mitsui OSK Group.