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Norwegian salmon farmer Lerøy has warned that its 2020 earnings may be lower than forecast in February because of the uncertainty caused by the Covid-19 pandemic.

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The company’s board also wants to reduce the proposed dividend for 2019 from NOK 2.30 to NOK 1.50 per share because of the situation and will ask for permission to do so at the annual general meeting on May 27.

It will also request authorisation to pay up to NOK 0.80 per share as dividend before the end of the present year. 

Much greater uncertainty

“Uncertainty relating to assessment of future development is much greater than normal, as it is extremely difficult to estimate the extent and scope of the consequences of the ongoing corona pandemic,” stated Lerøy, which owns 50% of Scottish Sea Farms.

“Based on the new risk incurred due to the pandemic, the Board of Directors’ expectation for the Group’s earnings in the current year differ from what was communicated in conjunction with the preliminary financial figures published on 25 February 2020.

“The Board of Directors retains its guiding for projected earnings for Q1 2020. However, due to the increase in uncertainty, the Board currently expects Group earnings for 2020 in total to be lower than those achieved in 2019.”

Appropriate profit allocation

Referring to the reduced dividend, the company said shareholders should feel confident that the board’s management of profit allocation is appropriate at all times.

“After careful consideration, the Board of Directors has weighed up the shareholders’ need for predictability, reallocation of capital and the need to take into account the increased level of risk currently dominating the global economy,” stated Lerøy.

The company’s decision to reduce its dividend follows that of Scottish Sea Farms co-owner SalMar to scrap its 2019 dividend completely.

Faroese salmon farmer Bakkafrost, which owns the Scottish Salmon Company, and Norway’s Grieg Seafood have both suspended dividend decisions until later in the year, and Norway Royal Salmon has cut its proposed dividend from NOK 10 to NOK 5.

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