EcoWorld International plans RM500m capital reduction for increased dividend payouts

EcoWorld International Bhd is set to bolster its commitment to rewarding shareholders, as it proposes a substantial capital reduction of RM500 million.

The move follows the company’s successful reduction of RM1.5 billion in issued share capital in August 2023, aligning with its focus on optimising cash generation and shareholder value.

The initiative comes on the heels of the company’s significant dividend declarations, totaling RM936 million.

This surpassed the earlier targeted distribution amount of RM900 million, showcasing the company’s robust financial performance and successful execution of its business strategy.

The proposed capital reduction is aimed at facilitating further dividend distributions, with a key emphasis on returning excess cash generated to shareholders.

Its president and CEO, Datuk Teow Leong Seng, noted that the strong appreciation of the British pound against the ringgit has allowed the repatriation of more sales proceeds than anticipated.

The group’s gearing is currently close to nil, except for one term loan at its joint venture company, EcoWorld London, for which sufficient funds have been earmarked for repayment following its maturity in March 2024.

Teow highlighted the company’s focus on monetising completed stocks for cash generation in the absence of immediate plans for new launches or acquisitions.

“After taking into consideration our reduced working capital and funding requirements and given the limited development opportunities on the horizon, our group will continue to focus on monetizing our completed stocks for cash generation.

“As such, the board believes it is in the best interest of shareholders for our group to return the excess cash generated.”

The proposed capital reduction, subject to shareholder approval at the upcomingAGM is anticipated to be completed by the first half of 2024.

It is explicitly aimed at enhancing the company’s ability to declare and pay dividends in the future, aligning with legal and regulatory requirements. – TMR