Crisis bites into Toyoda fortune

Ailing share price takes ¥42 billion chunk out of stake; dividend income seen at risk

by Alan Ohnsman

Bloomberg

Toyota Motor Corp.’s looming loss isn’t just a management challenge for Akio Toyoda, tapped to lead the carmaker his family founded. The global recession has cut the value of Toyota shares he and his father own by ¥42 billion and their dividend income may also fall.

The value of Akio Toyoda’s 4.6 million Toyota shares shrank 46 percent in the past nine months to ¥14 billion as of the close of trading Monday, while father Shoichiro Toyoda’s 11.2 million shares fell to ¥34.2 billion. The elder Toyoda, Toyota’s honorary chairman and former president, is the largest private shareholder, followed by Akio Toyoda, based on filing data.

The decline is an unrealized loss for the wealthy industrial family because neither has sold Toyota shares, according to available filing data. Still, the descendants of Toyota founder Kiichiro Toyoda will take a direct hit should the world’s largest carmaker reduce dividend payments, as analysts predict.

“The dividend going down will get the family’s attention faster than the stock price dropping,” said Jim Hall, principal of 2953 Analytics in Birmingham, Mich.

Toyota pays dividends twice a year and hasn’t set amounts for 2009. The payment has risen 28 percent in the past five years and last year totaled ¥140 a share. Spokesman Paul Nolasco declined to comment on this year’s dividend plans.

For the 52-year-old Akio Toyoda, 2008 dividend payments may have been worth ¥639 million, based on Bloomberg calculations. For his 83-year-old father it was likely ¥1.57 billion.

“I’m almost sure Toyota will cut its dividend this year and next,” said Koji Endo, a Credit Suisse Group AG auto analyst in Tokyo. “Obviously they are not happy about Toyota’s share price fluctuations, but probably this will not have any impact on their wealth.”

Toyota doesn’t disclose executive pay and doesn’t comment on the holdings of private investors, Toyota’s Nolasco said.

The Toyodas don’t rank among Japan’s 40 wealthiest people, based on data published by Forbes Asia last month. The magazine’s 2009 list required a minimum net worth of ¥47 billion, based on Feb. 6 stock prices, exchange rates and reported incomes.

Shoichiro Toyoda’s reported holdings of Toyota and affiliates Denso Corp. and Aisin Seiki Co. were valued at ¥35.4 billion as of Monday. Akio Toyoda’s holdings of Toyota and affiliate Toyota Boshoku Corp. are valued at ¥13.9 billion.

Toyota closed at ¥5,670 in Tokyo Stock Exchange trading June 18, the highest in the past year. It gained 3.61 percent to ¥3,160 at the close of trading Tuesday.

Reversing the carmaker’s stock slide is just one of the tasks facing Akio Toyoda, the first member of his family to lead the firm in 14 years. Toyota is bracing for its first annual loss in almost six decades.

The carmaker expects a net loss of ¥350 billion in the fiscal year that ends this month after vehicle sales in the United States, traditionally its biggest market, plunged 31 percent last quarter and 36 percent in the first two months of 2009.

Exacerbating the U.S. slump is the yen’s 9 percent rise against the dollar in the past six months, eroding the value of overseas sales.

While the Toyoda family founded the company and has maintained influence, it doesn’t have the same level of direct control that the Ford family exercises over Ford Motor Co.

Shoichiro and Akio Toyoda’s combined stake is just 0.46 percent of the company’s 3.45 billion outstanding shares, according to filing data.

Even when the company was founded by Kiichiro Toyoda in 1937, he and brother-in-law Risaburo Toyoda only owned about 8 percent of the then-privately held company’s initial 240,000 shares, said Toyota spokesman Nolasco.

“Toyota is not in the truest sense family-controlled,” said auto analyst Hall. “They don’t have anything like the Ford family’s nonrepresentative control.”

More than 100 years after Henry Ford founded his company, his descendants retain 40 percent of the voting power for the second-largest U.S. automaker through 70.9 million Class B shares — designed to keep family control. In Germany, members of the Quandt family directly own a combined 47 percent of BMW AG, the biggest seller of luxury autos. Herbert Quandt bought control of BMW in 1959.

Toyota’s two largest domestic competitors, Honda Motor Co. and Nissan Motor Co., have no founding-family members among their largest individual shareholders, according to filing data.

Nissan Chief Executive Officer Carlos Ghosn has a 3.1 million share stake in Nissan, according to filings. By comparison, current Toyota President Katsuaki Watanabe has just 31,871 Toyota shares and Honda’s Takeo Fukui owns only 23,000 shares of his company.