Hydro's dividend policy is in the long term to pay out, on average, 50 percent of net income as ordinary dividend over the cycle to our shareholders. The dividend policy has a floor of NOK 1.25 per share.
Share buybacks or extraordinary dividends will supplement dividends during periods of strong financials, due consideration being given to the commodity cycle and capital requirements for future growth. The payout should reflect Hydro's aim to give its shareholders competitive returns benchmarked against alternative investments in comparable companies.
Buyback of shares
In periods when earnings are high, Hydro may consider buying back shares in addition to ordinary dividend payments. Such considerations will be made in the light of alternative investment opportunities available to Hydro and its financial situation.
Funding and credit rating
Maintaining a strong financial position and an investment credit rating are viewed as important risk mitigating factors, supporting Hydro's possibilities for strategic development of its businesses. Access to external financial resources is required in order to maximize value creation over time, balanced with an acceptable risk exposure. To secure access to debt capital on attractive terms we aim at maintaining an investment grade rating from the leading rating agencies, Standard & Poor's and Moody's.
Contributing to retaining this credit rating, we intend to keep our funds from operations of at least 40 percent of net adjusted interest-bearing debt in addition to net adjusted interest-bearing debt at a ratio of no more than 0.55 to equity capital over time. In calculating this ratio, we include off balance sheet pension obligations, operating lease commitments and our share of net interest-bearing debt in joint ventures.
Information from Hydro
Hydro gives a high priority to communicating with the stock market, and aims to maintain an open dialog with market participants. Our objective is to provide sufficient information on a timely basis to all market participants to ensure a fair valuation of our shares. Information that is considered price sensitive is communicated by news releases and stock exchange announcements. We host regular meetings for investors in Europe and the US. Most brokers in Oslo and London publish equity research reports on Hydro. Information about Hydro is published on our website: www.hydro.com.