Investor Presentaiton
Shareholder and
financial policy
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Aiming for competitive shareholder returns and dividend yield compared to
alternative investments in peers
Dividend policy
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Average ordinary payout ratio: 50% of adjusted net income over the cycle
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1.25 NOK/share to be considered as a floor
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Share buybacks and extraordinary dividends as supplement in periods with strong
financials and outlook
Five-year average ordinary pay-out ratio 2018-2022 of ~74%
Maintain investment-grade credit rating
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Currently: BBB stable (S&P) & Baa3 stable (Moody's)
Competitive access to capital is important for Hydro's business model (counterparty risk
and partnerships)
Financial ratio target over the business cycle
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Adjusted net debt to adjusted EBITDA < 2x
Hedging policy
Hydro
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Overall risk policy
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Remain exposed to the inherent cash flow volatility related to Hydro's business
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Fluctuating with the market - volatility mitigated by strong balance sheet
Diversified business
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Vertical integrated value chain reducing risk and volatility
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Strengthening relative position to ensure competitiveness
Upstream margin risk
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Currency exposure, mainly USD and BRL
Exposed to LME and Platts alumina index prices
Strategic and operational hedging with perspective of mitigating downside risk and
securing margins (not opportunistic)
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Operational LME hedging - one-month forward sale
Downstream margin risk
Spread between customer prices and the underlying production cost
As such exposed to commodity prices, exchange rates, other costs, market conditions
and negotiating power
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Risk is managed through operational hedging programs
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