Yara expects to return 40–45% 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 since the IPO, a dividend level that restricts Yara’s growth will not be desirable.
Yara’s dividend policy is to pay out a minimum 30% of net income as an average over the business cycle. Yara believes it will be beneficial for shareholders that the Company strives for a gradual increase and predictability in the absolute dividend level over time, independent of the business cycle.
The Board proposes a dividend of NOK 7.00 per share, a 27% increase from 2010, totaling a payment of NOK 1,998 million based on outstanding shares at the date this financial statement was authorized for issue. Combined with the positive result in Yara International ASA and other effects, this results in a net reduction in equity of NOK 934 million. Distributable equity in the parent company as of 31 December 2011 was NOK 3,615 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 2011, Yara bought back and redeemed shares for a total of NOK 763 million.
In total, Yara paid out NOK 2,347 million in 2011 in dividends and share buy-backs, representing 27% of net income in 2010. The proposed 2011 dividend represents 17% of net income and 20% of net income excluding net foreign exchange gains and special items.