Ferrotec unveils plan to boost shareholder value, target 15% ROE by 2027

Ferrotec Holdings Corporation outlined its strategy to improve shareholder value, focusing on Price to Book Ratio (PBR) and Return on Equity (ROE). The company acknowledges that its PBR has been below 1.0x from March 2022 to March 2025, with the March 2025 PBR at 0.53x, and ROE at 7.1%, which is below its cost of capital of 9.94%. Ferrotec aims to achieve a 15% ROE by March 2027 by improving Return on Invested Capital (ROIC), optimizing asset turnover, and enhancing financial leverage, while boosting Price-to-Earnings Ratio (PER) through shareholder returns and strengthening non-financial strategies.

To fund growth and shareholder returns, Ferrotec plans capital expenditures of JPY140 billion from March 2026 to March 2028, primarily for new factories in Malaysia and other investments. Concurrently, the company intends to divest over JPY50 billion in group assets, including subsidiary shares, over three years. Proceeds from these sales will be allocated to investment and shareholder returns, including share repurchases.

Ferrotec is also reforming its executive compensation system to align with medium-term management plan achievements, transitioning to performance-linked incentives. For the March 2028 period, the company targets JPY400 billion in net sales, JPY47 billion in operating profit, an 11.8% operating profit margin, JPY29 billion in net income, and a 40% equity ratio, with a dividend per share of JPY148.