Yara expects to return 40–45 percent of net income to its shareholders, measured as the sum of dividends and share buy-backs, averaged over the business cycle.
As long as Yara can maintain profitability at the attractive level achieved over the past five years, a dividend level that restricts Yara’s growth will not be desirable. Yara’s dividend policy is to pay out a minimum 30 percent of net income as an average over the business cycle. Yara believes it will be beneficial for shareholders for the Company to strive for a gradual increase and predictability in the absolute dividend level over time, independent of the business cycle.
Consequently, Yara expects to pay out somewhat more than 30 percent of net income in years with weaker-than-average cash flow from operations – and less than 30 percent in years with stronger-than-average cash flow from operations.
The Board proposes a dividend of NOK 4.50 per share, totaling a payment of NOK 1,300 million. Combined with the positive result in Yara International ASA, this means an increase in equity of NOK 749 million. Distributable equity in the parent company as of Dec. 31, 2009, was NOK 1,826 million after proposed dividend.
Yara will use share buy-back programs when certain conditions are met. Share buy-backs are more flexible than dividends. For most shareholders, buy-backs also provide tax advantages compared to dividends. In 2009 Yara did not buy back shares, but redeemed 993,439 shares from the Norwegian State for a total of NOK 240 million, and cancelled 1,750,000 shares bought back in 2008.
In total Yara paid out NOK 1,544 million in 2009 in dividends and the redeeming of shares, representing 19 percent of consolidated net income in 2008. The proposed 2009 dividend represents 34 percent of consolidated net income.