Dividend policy and dividend proposal

The board of directors’ intention is to provide shareholders with a continued good dividend yield while ensuring that, as in the past, expansion and investments can proceed with a continued strong financial profile and freedom of action. Based on this, the board of directors has agreed a dividend policy stating that the total dividend should exceed 50 percent of profit after tax, yet taking into consideration the capital structure target. The dividend will be paid in two instalments – one in the spring and one in the autumn.

The board of directors has decided to propose an unchanged dividend of SEK 9.75 per share (9.75) to the annual general meeting on 7 May 2020, corresponding to 120 percent (127.5) of the group’s profit after tax.

The record date proposed for the first payment of SEK 4.90 is 11 May 2020. This would then be paid out on 14 May 2020. The record date proposed for the second dividend payment of SEK 4.85 is 10 November 2020. This would then be paid out on 13 November 2020.

The board of directors is of the opinion that the proposed dividend is justifiable since it is based on the fact that the underlying business is showing gradual improvements, investments (capex) will reduce in 2020, the stock-in-trade situation has improved and the company remains in a strong financial position. The dividend proposal takes into consideration the financial position and continued freedom of action of the group and the parent company, the capital structure target and the requirements that the nature and extent of the business and its risks, expansion and development plans impose on the group’s and the parent company’s equity and liquidity.

Capital structure

The H&M group advocates a conservative leverage ratio, aiming for a strong capital structure with strong liquidity and financial flexibility. It is essential that, as in the past, expansion and investments can proceed with continued freedom of action. 

The capital structure is defined as net debt in relation to EBITDA. Over time, this should not exceed 1.0 x EBITDA. Net debt / EBITDA was 0.2 (0.3) as of 30 November 2019. 

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