New investments require financing. For much of its history, Hydro has been able to finance new investments through operations or through taking up loans. However raising capital through the company's attractive shares has also been an important factor.
The Hydro share was floated on the New York Stock Exchange on 25 June 1986. The timing proved to be somewhat unfortunate, for 1986 was one of only four years in Hydro’s long history with red figures at the bottom line.
But 1986 was an unusual year with a major fall in oil and mineral fertilizer prices, and – thanks to active market communication – was seen as just that: an exception for Hydro.
American investors did not let the opportunity pass them by and increased their stake in the company from two to 15 per cent. The listing on the New York exchange and the confidence in the company resulted in a NOK 2.5 million (EUR 300 million at 2003 exchange rate) injection of capital, despite the weak stock market at the time. This was the largest increase in share capital in Scandinavia at the time, and was the first time subscription rights were offered to shareholders in Europe and the US at once.
The 1980s were an expansive period in Hydro’s history. During the seventies, most investments had been made in Norway, but in the following decade the majority were in other countries. These included the purchase of fertilizer plants, the building of a magnesium factory in Canada, expansions in the aluminium industry also within semi-manufactured products. Then there were the investments in oil and gas projects in the North Sea, which remained high throughout the eighties. Investments totalled more than NOK 60 billion (EUR 7 billion at 2003 exchange rate) during the course of ten years.
“What we learnt in the eighties was a confirmation of the conclusion we drew at the end of the seventies: financial reserves are important to survive a recession, retain freedom of action and be able to take interesting investment opportunities when these arise,” said Georg Størmer, the company’s financial director for many years, at the beginning of the nineties.
Ups and downs
Historically, the Hydro share has been a good investment, particularly so in the eighties when its value increased by a factor of five. The share price developed more slowly during the nineties, but nevertheless amounted to a doubling of value.
Investments remained high during this period as the company put into practice its strategy of focusing on three core areas Oil and Energy, Agri and Aluminium. Focus on the end-user market also increased.
Hydro’s policy is that over a few years the dividend shall average around 30 per cent of the company’s net result. In 2001, for example a dividend of NOK 10 (EUR 1.2 at 2003 exchange rate) was paid per share.
In 2002, a turbulent year in the stock market, a dividend of NOK 10.50 (EUR 1.3 at 2003 exchange rate) was paid per share. This was the year the Oslo Stock Exchange fell by 31 per cent, and the Hydro share also fell around 15 percent in terms of Norwegian kroner when adjusted for the payment of a NOK 10.50 dividend.
The Hydro share today
The Hydro share is listed on the Oslo Stock Exchange, the New York Stock Exchange and on stock exchanges in five other countries. An increasing portion of sales takes place on the Oslo Stock Exchange. In 2002 Hydro decided to take its shares off the stock exchange in the Netherlands. Around 223 Hydro share transactions were registered on the Oslo Stock Exchange in 2002. This was by far the most sold share on the Oslo exchange accounting for nearly 17 per cent of transactions.
At the end of 2002, Hydro had 42,901 registered shareholders. The Norwegian state is the largest shareholder with 43.8 per cent. Other Norwegian shareholders own 20.1 per cent, while 36.1 per cent is owned by shareholders in other countries